Federal prosecutors on Wednesday announced the indictment of U.S. Rep. Chris Collins, a Republican from western New York, on insider trading charges related to his service on the board of an Australian biotechnology company that he and several family members invested in.

Charges were also filed against his son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins' then-fiancée, Lauren Zarsky, relating to securities of Innate Immunotherapeutics.

The indictment was announced by U.S. Attorney for the Southern District of New York Geoffrey S. Berman. At a midday press conference, Berman laid out the details of the investigation and said that the felony charges were evidence that "this is a nation of laws" where even the powerful stood equal.

Collins and his son were arraigned in federal court in Manhattan in the afternoon, entering pleas of not guilty. In an evening press conference, Collins said he'd fight to clear his name and remain on the ballot.

Innate's primary development efforts went to a drug known as MIS416 that was intended to be used in the treatment of a form of multiple sclerosis. The indictment alleges that after the company's CEO informed the board on June 22, 2017, that the drug had failed clinical trials, Chris Collins passed the bad news to his son.

Chris Collins at the time owned almost 17 percent of the company's stock, though the shares were held in Australia, where Innate had asked for a halt to trading in advance of the public release of the drug trial data. His son owned 2.3 percent of the company's stock, though his shares were held in the U.S., where a trading halt was not imposed.

The indictment notes that when Chris Collins received the information about the drug trials from Innate's CEO ("I have bad news to report," his email began), the lawmaker was attending the annual congressional picnic at the White House. Numerous outlets produced photos of Collins at the event, staring at his phone as the rest of the crowd was turned the direction of President Donald Trump and his wife, Melania.

"Wow," Collins replied in an email. "Makes no sense. How are these results even possible???"

The indictment shows phone records of seven calls between Collins and his son that immediately followed that email — six missed calls followed by a six-minute conversation in which, prosecutors allege, Collins shared the insider information.

Cameron Collins allegedly passed the information along to Stephen Zarsky and three others, including his daughter, Zarsky's wife, Dorothy Zarsky, and a friend. Zarsky then passed the information to two of his brothers and a friend who was a Florida-based financial adviser.

As a result, many of the individuals who had received the insider information were able to dump Innate's stock and avert a total of $768,000 in losses, according to the indictment. After the drug trial results were announced to the public on the evening of June 26, 2017, Innate's stock lost more than 92 percent of its value.

The indictment also alleges that Chris Collins subsequently tried to conceal his son's illicit trading activity, in part by issuing a misleading news release.

"We want this to go away," Collins wrote in an email quoted in the indictment, referring to negative news coverage of the stock sales.

The indictment includes charges of securities fraud, conspiracy to commit wire fraud, wire fraud and making false statements.

A statement from Collins' attorneys was posted on his congressional website: "We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name," they said. "It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock. We are confident he will be completely vindicated and exonerated."

Collins, 68, sent an email to supporters reiterating his profession of innocence and saying that he would not comment on the matter going forward outside of the legal proceeding. After his arraignment, however, Collins announced he would hold a news conference Wednesday evening in Buffalo.

He said he would continue to seek re-election to Congress.

Here's the indictment:

Collins Indictment by cseiler8597 on Scribd

Also Wednesday, the federal Securities and Exchange Commission announced parallel charges against Collins and his son, seeking to bar Chris Collins from serving as a board member or officer for any company and other sanctions.

The SEC also announced the settlement of charges against Lauren and Dorothy Zarsky for insider trading. Without admitting or denying the charges, the paid agreed that they sold their shares of Innate based on tips they received from Cameron Collins. Lauren Zarsky agreed to disgorge her ill-gotten gains of $19,440 plus interest and pay a civil penalty of $19,440. Dorothy Zarsky agreed to give up $22,600 plus interest and pay a civil penalty of $22,600.



Collins — a Schenectady native whose father was a General Electric engineer — was the first sitting member of Congress to endorse Trump's maverick presidential run. The Republican has also been a regular sparring partner of Gov. Andrew Cuomo, who has assailed Collins as a "Benedict Arnold" for supporting Trump's efforts to reduce the federal deduction for state and local taxes.

Collins was one of the four members of the state's nine-member GOP delegation that voted in favor of the federal tax bill.

On Wednesday, House Republican Speaker Paul Ryan said that the chamber's Ethics Committee would take up the charges against Collins. He also announced that the congressman would be booted from the House Energy and Commerce Committee until the criminal matter is resolved.

The federal charges add a new headache for Republicans as they fight a district-by-district battle to retain the House majority. Grand Island Town Supervisor Nate McMurray, his Democratic opponent, said in Wednesday afternoon press conference that the race was now winnable and that his financial support had jumped in the hours since the indictment was announced.

State Democratic Committee Chair and Buffalo Mayor Byron Brown called on Collins to resign.

There had been talk in Democratic circles of encouraging Lt. Gov. Kathy Hochul, who was defeated by Collins after holding the congressional seat in 2011 and 2012, to seek the party's nomination, but she declined.

Collins' indictment arrives just days before Trump is slated to make his first visit to upstate New York since taking office.

The president will be at Fort Drum in Jefferson County to sign a defense appropriation bill and is expected to appear at a fundraiser for Rep. Claudia Tenney, who was another one of the four "yes" votes for the tax measure.

