SWAMP THING
Upstate GOP Rep arrested for insider trading
Rep. Chris Collins (R-Buffalo) is accused of using his position as a pharmaceutical company board member to get inside information and then tell family members to sell their shares.
An upstate congressman who was one of President Trump’s earliest and most robust supporters was arrested Wednesday on insider-trading charges tied to a phone call he made from the White House lawn, authorities said.
US Rep. Chris Collins is accused of tipping off his son — while attending the 2017 Congressional Picnic — to results of a failed drug trial that was about to crash the stock price of an Australian biotech company.
Collins, who sat on the board of Innate Immunotherapeutics and was its biggest shareholder, got the highly privileged information moments earlier in an e-mail from the company’s CEO, Manhattan US Attorney Geoffrey Berman said.
Passing along the information allegedly allowed Collins’ son, Cameron, and six other investors to avoid a combined $768,000 in losses by selling Innate stock before the share price plunged 92 percent, from 45.5 cents to just 3.5 cents.
“Congressman Collins, who by virtue of his office helps to write the laws of our nation, acted as if the law didn’t apply to him,” Berman said.
Collins, a Republican who represents the Buffalo and Rochester suburbs, was the first member of Congress to endorse Trump’s candidacy and served as his liaison to GOP lawmakers during the 2016 campaign.
Trump and First Lady Melania Trump posed for a photo with Collins and Buffalo-area developer Gerry Buchheit during the 2017 Congressional Picnic, as evidenced by a picture Collins posted on Instagram.
Collins, 68, allegedly spoke with Cameron, 25, after the two frantically exchanged six missed calls to each other between 7:10 p.m. and 7:15 p.m. on July 22, 2017, during the picnic on the South Lawn.
Collins finally reached Cameron at 7:16 p.m., and their conversation lasted 6 minutes and 8 seconds, according to a Manhattan federal court indictment.
Video shot by CBS News at the time shows Collins, wearing a white golf shirt and gray pants, speaking on a cellphone outside the White House at 7:17 p.m. as presidential son-inlaw and adviser Jared Kusher walks by.
After receiving the inside information from his dad, Cameron sold nearly 1.4 million shares of Innate stock, avoiding more than $570,000 in losses, according to the feds.
Cameron also allegedly shared the tip with his fiancée, Lauren Zarsky, her parents and a pal, all of whom dumped the Innate stock they owned.
Her parents bought their shares after Zarsky, 25, sent mom Dorothy a text in August 2016 that said she was considering investing $15,000 because it “has a greater than 50% chance of going up to $250k,” according to court papers filed by the Securities and Exchange Commission.
“That is almost unheard of and cams dad almost guarantees it within the next 1 to 2 years,” Zarsky’s text message allegedly added.
Her dad, Stephen Zarsky, also is accused of tipping off his brother, sister and a friend who works as a financial adviser in Florida, all of whom also owned Innate stock.
Stephen Zarsky’s brother and friend both unloaded their shares, but the broker for his sister was “unable to execute” her sell order, the indictment says.
Collins couldn’t join in the panic selling because his hoard of Innate’s penny stock — nearly 17 percent of the company reportedly worth around $22 million in April 2017 — was held in Australia, the court papers state.
Trading in Australia had been halted pending announcements of the clinical testing of MIS416, a drug In-
nate had developed to treat multiple sclerosis.
In addition, Collins was barred from selling because he was the subject of an ongoing House Ethics Committee probe into his Innate holdings, court papers say.
Other Innate investors with ties to Collins include his daughter, Kaitlan; chief of staff, Michael Hook; and six current and former GOP congressmen, including ex-Health and Human Services Secretary Tom Price, who resigned last September amid controversy over his lavish spending.
Collins, who invested heavily in Innate’s 2013 IPO, first came under scrutiny when he inserted language into 2016’s “21st Century Cure Act” to expedite the approval process for drugs like the one Innate was developing.
The Office of Congressional Ethics later found “substantial reason to believe” he’d improperly shared inside information about Innate stock and accused him of misusing his position to help Innate score a meeting with the National Institutes of Health.
Collins, son Cameron and Stephen Zarsky, 66, all surrendered to the FBI Wednesday and were charged in Manhattan with conspiracy, securities fraud and lying to the feds.
Collins, Cameron and Stephen Zarsky also were slapped with a civil suit by the SEC, which said Lauren Zarsky and her mom had both settled related civil charges by agreeing to forfeit $19,400 and $22,600, respectively, in ill-gotten gains, pay fines identical to the amounts they forfeited plus less than $1,000 each in interest.
None of the defendants would comment after they pleaded not guilty and were released on $500,000 bond each.
After appearing in a Manhattan courtroom, Collins went back to his home district and appeared before cameras to defiantly declare his innocence.
“The charges that have been levied against me are meritless, and I will mount a vigorous defense in court to clear my name,” he told reporters in Buffalo.
The embattled lawmaker also vowed to continue his campaign for re-election in November.
He declined to answer any questions.