JUST IN: Rep. Chris Collins (R-NY), Trump’s earliest congressional backer, arrested by the FBI on securities fraud-related charges, via @jonathan4ny
— Peter Alexander (@PeterAlexander) August 8, 2018
Congressman Chris Collins (R – NY) was arrested this morning by the FBI shortly after he was indicted for securities related fraud related to insider trading allegations. From NBC:
Chris Collins, a Republican congressman from upstate New York, surrendered to the FBI on Wednesday morning on securities fraud-related charges, prosecutors said.
Collins, 68, faces insider trading charges along with his son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins’ fiancée, according to the U.S. Attorney’s Office in the Southern District of New York.
The case is related to Innate Immunotherapeutics, an Australian biotech company, on which the elder Collins served on the board.
The Daily Beast did the in depth reporting on the allegations, now charges, in April 2017 (emphasis mine).
When an Australian pharmaceutical company sought to raise money with the goal of entering the U.S. drug market, Rep. Chris Collins pitched in.
The Republican congressman purchased $2.2 million worth of stock in Innate Immunotherapeutics as part of its initial public offering in late 2013, according to a previously unreported document Collins filed with Australia’s securities authority. The IPO prospectus said Innate would seek FDA approval of its drug to treat multiple sclerosis. More than a year later, Collins wrote into a bill language to expedite the FDA’s approval process for such drugs. Four months before the bill was signed into law, Collins again purchased stock in Innate, this time as much as $1 million, according to congressional financial disclosure records.
Ethics experts say all of this amounts to a conflict of interest that warrants investigation by the Office of Congressional Ethics and the House Ethics Committee.
Collins said he did not participate in any IPO on a financial disclosure form filed in 2014 (PDF), but that’s not a crime, thanks to a gaping loophole in the STOCK Act discovered by The Daily Beast.
The law, passed to stop insider trading among members of Congress, only requires them to disclose involvement in U.S. IPOs, but not foreign ones, a House Ethics Committee official told The Daily Beast.
“This is simply outrageous,” Larry Noble, a former Federal Elections Commission lawyer, told The Daily Beast of the loophole. “One could argue that not only should foreign IPOs not be exempt, but that they present an even greater possibility of a conflict of interest because they’re involved with foreign persons.”
Collins owns approximately $22 million worth of Innate stock, or 16.5 percent of the company, and sits on its board of directors, according to the company. Since the IPO, Collins’s children, his chief of staff, and a score of campaign donors have bought into Innate, whose stock price has tripled since its initial offering in 2013.
“Do you know how many millionaires I’ve made in Buffalo the past few months?” Collins was overheard on Capitol Hill telling someone on the phone in January, though it is not known what exactly he was talking about.
Five other Republican congressman have also invested in Innate, including the new secretary of Health and Human Services, Tom Price.
All told, Collins and people with close personal and political ties to him own approximately 30 percent of Innate.
Innate’s prospectus also shows why Collins’s work on the 21st Century Cures Act presents such a potentially serious conflict of interest, ethics experts said. Collins’s provision in the bill makes it easier for companies to be granted investigative drug approval, something Innate’s prospectus repeatedly defines as its main strategy for reaching the U.S. market.
Money raised by the initial public offering that exceeded the amount needed for the second phase of clinical trials for MIS416 would go toward “initiating the Investigational New Drug process with the FDA,” according to Innate’s prospectus.
In a statement touting the Cures Act provision, Collins said that “the method used to evaluate investigational drugs have remained the same for decades,” and called for the approval process for those drugs to be streamlined. That is now law thanks to the passage of the Cures Act.
Noble, the former government lawyer and an ethics expert, said that because Collins’s provision will have a broad impact on companies across the pharmaceutical industry, it might not be seen as a direct conflict of interest. But it is the provision’s specific effect on Innate—and Collins’s lead role in pushing the provision—that should prompt an investigation, Noble said.
“It’s one thing for a member of Congress to simply vote on something like this, and it’s entirely another for that person to have been the one leading the charge on it,” Noble said. “This is a very serious conflict of interest matter. There’s a lot financially at stake for him, and there’s a serious question of whether or not he put a provision in a statute that will benefit that financial upside.”
Noble added that, at the very least, Collins should have informed ethics officials of his relationship with Innate before crafting legislation that would help the company. It is not known whether Collins consulted the House Ethics Committee, or disclosed the extent of his involvement with Innate prior to pushing for the provision included in the Cures Act.
Collins’s potential conflict of interest got deeper last year. In August 2016, he bought as much as $1 million in company stock, according to financial disclosure records (PDF). Two months later, Collins’s language was present in the Cures Act. Two weeks later President Obama signed the bill into law.
Not only is it in Collins’s interest to see Innate succeed, but getting MIS416 to the lucrative U.S. market would enrich a sprawling network of family, friends, and political donors of Collins.
Collins’s circle began investing heavily in 2013, when Innate offered its IPO.
Much, much more at the link!
While Congressman Collins was the first member of the House of Representatives to endorse the President’s campaign and was a member of the transition. There is no indication in the reporting that Congressman Collins’ very overt and very suspect financial dealings and their interaction with his legislative work is in any way connected to the Special Counsel’s investigation. Seeming congressional financial and investment shenanigans, however, has been a long standing problem that is occasionally reported on, but needs some serious sunlight and attention directed at it. Far too many members of Congress in both chambers enter Congress well off and, after a career making between $140 to $175K a year (rank and file versus leadership), leave Congress very, very wealthy. The reasonable suspicion is that much of this wealth is the result of trading on what they learn in the course of their congressional duties. This is clearly unacceptable and must be stopped. Unfortunately the people who would have to take action to stop it are also the people who are engaged in it.
Stay financially solvent!