Chris Collins: Indicted
If you had told me Wednesday morning that Representative Chris Collins would be arrested, indicted, and arraigned for federal crimes, I’d have thought you were crazy.
If you told me that he’d be arrested, indicted, and arraigned for federal crimes and not resign, and instead continue to mount a re-election campaign, I’d have thought I was crazy.
Yet, here we are.
On Wednesday morning, a grand jury indictment was unsealed in the U.S. District Court for the Southern District of New York accusing Chris Collins, his son, Cameron, and his son’s fiancee’s father, Stephen Zarsky, of securities fraud, conspiracy to commit securities fraud, and lying to the FBI. The indictment is quite detailed and very damning.
A bit of background about Chris Collins. He rose to power through a “run government like a business” ethos that bought him one tumultuous term as Erie County Executive. After losing re-election in 2011, he narrowly won himself a House seat in a newly re-drawn district that seemed custom-made for him. He elevated himself out of backbencherdom through his full-throated support and defense of Donald Trump. He was the first Congressman to endorse Trump, sticking his neck out quite a bit at the time. At the time, Collins said he was endorsing Trump for an “end to business as usual” in Washington. Arguably, one way to end business-as-usual is to commit securities fraud, conspiracy to commit security fraud, and lying to the FBI.
Two years ago today I was the first Member of Congress to endorse @RealDonaldTrump for President of the United States. I continue to stand with our President and applaud his efforts to #MakeAmericaGreatAgain— Rep. Chris Collins (@RepChrisCollins) February 24, 2018
Before we go on, I have this to say directly to my Congressman: Resign. Now. We deserved better than you; we deserve better than you. You are in it only for yourself and your cronies, and that has palpably been true since day one of your benighted tenures in public “service”. I have written about you—almost always critically—since 2007. Here is the compendium of posts from WNYmedia.net, here are the Artvoice-era posts, and here are the ones from the Public. This is a post I did after Collins lost re-election as County Executive in 2011; it is a pretty good run-down of his tenure, even if the links are mostly broken.
In November 2017, I mockingly likened Collins’ pimping of Innate Immunotherapeutics stock to “Mad Money”. Now, as the excrement hits the fan, it goes without saying that a day where your official Congressional website contains a rote exculpatory statement from your lawyers is a bad one.
So, let’s look at the indictment itself.
Chris Collins was a member of the board of Australian biotech company Innate Immunotherapeutics. He was also its largest shareholder. As a member of the board, he was among the first people to learn that a key Innate drug trial had been a failure. The law requires him literally to shut up about that; he is duty-bound to not pass the information along—the law demands that insiders not use their status and information to gain an advantage in the market.
This is not an obscure law that Collins wouldn’t have been aware of. He was quite obviously cognizant of it, given that he didn’t sell his own shares. Instead, Collins called his son, Cameron, who was also heavily invested in Innate. At the time Collins received the news about Innate’s drug trial failure, Collins was attending the Congressional Picnic on the South Lawn of the White House, and pictures emerged of him at the event, on the phone at the exact time he is accused of calling his son.
VIDEO: Rep. Chris Collins speaking on his phone at last summer’s White House Congressional Picnic. The photo was taken at approximately 7:17 p.m. According to the indictment, Collins called his son Cameron at 7:16 p.m. (VIDEO: CBS) pic.twitter.com/EvSzrHTkY4— News 4, WIVB-TV (@news4buffalo) August 8, 2018
Almost immediately, Cameron began dumping his shares, seemingly in a panic. And, like the old shampoo commercial goes, he told two friends, and so on. As a result, Collins’ family and cronies avoided over $750,000 in losses they otherwise would have incurred had they waited for the information to be made public. Classic case.
Collins himself was already under federal scrutiny for his dealings with Innate, and knew better than to try and sell his shares.
Cameron, however, sold 1.4 million shares, and realized over $550k in savings by doing so based on his inside information from his dad.
Cameron’s fiancee sold her Innate shares based on Chris Collins’ insider information, avoiding $19,440 in losses. Cameron’s fiancee’s mom did the same, avoiding $22,000 in losses. The fiancee’s dad saved $144k in losses through insider trades. This will undoubtedly put a damper on the wedding, and one has to imagine Cameron’s shock and horror as he saw his future father-in-law’s new Innate-fueled nest egg become worthless.
When the news broke, and the Buffalo News’ Jerry Zremski made inquiries, Collins and his crew lied about it.
Collins made a name for himself by promoting “lean Six Sigma” and implementing it—with no measurable effect—in county government. The point is to streamline corporate processes and make them as efficient as possible. Well, the most efficient way to buy yourself a federal penitentiary stay is to lie to the FBI.
The government also demands that the indictees surrender and forfeit all money and property derived from proceeds traceable to the commission of the accused offenses.
These are just the criminal allegations. There is also a simultaneously filed civil action brought against these three defendants—including my Congressman—by the Securities & Exchange Commission. This civil suit contains a nice, handy graph of the tipping conspiracy:
The SEC demands that the defendants, if found liable, “disgorge” themselves of their ill-gotten gains, and further demands that Collins be forever barred from ever again serving as a director or officer of any SEC-regulated corporation.
Now, imagine you’re a father of a 25 year-old and you buy your kid a federal indictment and SEC lawsuit.
The Complaint goes on to allege that Chris Collins breached a duty he owed as a member of Innate’s board to protect material non-public corporate information. The moment Chris Collins learned of the failure of Innate’s drug trial, he set off a “tipping chain” with material, nonpublic corporate information.
The SEC alleges that Cameron was careful in selling his Innate shares so as to minimize his impact on the share price for other tippees; he knew exactly what he was doing.
The SEC includes some more detail about Collins’ lies to the News’ Jerry Zremski regarding the Collins family’s sale of Innate shares.
The Balls on this Guy
Before you give me the “innocent until proven guilty” shtick, save it for court. That’s the only place that matters — within the justice system. The judge and jury need to be impartial, and will be required to operate under that presumption of innocence. The prosecution doesn’t have to presume his innocence; it would be unethical for them not to zealously represent their client, the people of the United States. Commentators don’t have to presume that Collins is innocent — I read the indictment, and so far I haven’t heard Collins utter even one syllable about how that indictment is factually or legally incorrect. All he’s said is that he didn’t sell his shares. We know; you couldn’t have anyway, and you don’t get a booby prize for accidentally doing one thing right.
Given all of this very well-documented evidence of criminal activity, one would assume that the targeted, arrested Congressman would resign. How can an indicted lawmaker currently in federal custody (out on $500,000 bail) credibly represent his constituents, much less run for re-election? Right now, his number one job is to stay out of jail and defend these charges and the SEC lawsuit. He’s trying to buy some time, perhaps, but the writing is on the wall here. He held a position of public trust and blew it to pieces so his kid and cronies could save a few bucks before shares in Innate plummeted. How did he advance the interests of his constituents here?
More to the point, Collins held a “press conference” at the Avant Wednesday night. He kept the media waiting 90 minutes past the scheduled start time. He and his wife came out to the podium, and Collins engaged in languorous autofellatio about what a great businessman he is, and how he wants to abolish multiple sclerosis. He insisted that he’s innocent, will defend himself vigorously, but will not take any questions at this “press conference”. Instead, he’s going to stay in Congress, run for re-election, and not respond to one question about these charges outside of court, ever.
How are you going to run for office while under arrest for crimes you won’t address? The only way that happens is if you don’t leave the house. He can’t debate his opponent, plucky Grand Island Democrat Nate McMurray. He can’t show up to your chicken BBQ or lawn fete. He can campaign and get asked incessant questions about his supposed crime, or he can stay home and do nothing. Given that he won’t resign or drop out, I have to assume that Collins believes that the (R) after his name is all he needs. Maybe he can self-fund some TV ads and direct mail, and coast to re-election.
There’s no way Nick Langworthy and the other Republican county chairs are supportive of Collins’ decision to stay in this race, and incredibly their hands are tried until and unless Collins decides to drop out. Collins isn’t just pre-occupied with criminal and civil fraud charges, but effectively holding the seat hostage and preventing his party from properly assessing its options.
For McMurray’s part, he held a respectful news conference where he didn’t gloat, but reminded the people of NY-27 that they deserve better than this.
They deserve better than insider trading and corruption. They deserve better than Collins’ trademark specialty—condescending, self-righteous hubris. “Because my focus is to defeat the charges in court, after today, I will not address any issue related to Innate … outside of the courtroom,” Collins said.
I have to hope that the people of NY-27 won’t stand for that. I have to believe that Collins will reconsider and exit the race by the end of the week, because anything less than that is sheer insanity. His Avant statement was all me-me-me and nothing about the actual crimes being alleged. I can’t imagine that Nick Langworthy or any other local Republican is happy with this catastrophe of a candidacy. Make no mistake: given the choice of stepping aside so the Republicans can more safely hang on to that seat or staying in despite a federal indictment, Collins chose his own power and prestige; not his party and not his constituents.
Nate McMurray is the Democrat running against Collins. He needs your help and support.
The biggest criticism of my campaign so far is that we have no money. I could’ve cared less. I was proud. We did it right—picnics and potlucks.— Nate McMurray for Congress (@Nate_McMurray) August 9, 2018
Guess what else? A little money is now flowing in. Make it a little more? All amounts help!https://t.co/n5dNZeuNHT
Nate had a very slim chance in this R+11 district on Tuesday, but Wednesday changed everything. Clearly, Collins could continue to run and he could even win. That (R) means a lot in this bespoke conservative district.
As of April, the district had a moderate GOP enrollment edge with 183,641 active Republicans, 142,703 active Democrats and 97,801 independents.
But the district has voted heavily for Republicans since the most-recent round of redistricting in 2012, when a court redrew it to include all or part of eight western New York counties, including portions of Erie and Monroe.
Trump won the district by a 24-point margin in 2016, making it by far his best congressional district in the heavily Democratic state, according to The Cook Political Report.
Collins himself won big in 2014 and 2016, taking home 71 percent and 67 percent of the vote, respectively, against little-known opponents after narrowly defeating then-incumbent Rep. Kathy Hochul, D-Buffalo, in 2012.
Collins also has another distinct advantage: $1.3 million in his campaign account compared to McMurray’s $81,772.
Bad news, right? But this one change means a lot:
Cook political report changes #ny27 race from “toss-up” to “lean R” http://t.co/aJci5tF1 #Roc #politics— Jessica Alaimo (@JessicaAlaimo) November 1, 2012
With this may come the two things McMurray’s plucky grassroots campaign desperately needs: organization and money. If the left-of-center PACs and SuperPACs smell enough blood in the water, look for a ton of money and ads to come into the district. Look for young and experienced campaign workers to come into the district and do a re-run of the Hochul races. This is a big deal, and a big influx of money is the shot in the arm McMurray needs. Yesterday, McMurray earned himself an extra 1100 Twitter followers, and raised more money yesterday than during the entire previous campaign period.
Look out, NY-27, now we have a race.