Rep. Chris Collins (R-N.Y.), a longtime ally of President Trump on Capitol Hill, has been arrested and charged with federal securities fraud related to an Australian pharmaceutical company of which he had been the largest shareholder.
Collins turned himself in to the FBI on Wednesday morning.
A grand jury has also indicted Collins’s son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins’s fiancée.
Prosecutors allege that Collins, who served on Sydney-based Inmate Immunotherapeutics’s board of directors, gave nonpublic information about drug trial results to his son to help him “make timely trades in Innate stock and tip others.” The drug in question was developed to fight advanced multiple sclerosis.
Innate had expected positive results from clinical tests of the drug, but the treatment was not found to be successful when clinical trials that ended in June 2017.
The Hill adds:
According to the indictment, the company received the test results on June 22 and halted trading of its stock in Australian markets pending the announcement of the negative findings, but not in the U.S.
The company’s CEO shared the results with board members and top executives that evening, according to the indictment, explaining, “I have bad news to report.” Investigators said Collins received the email while attending the White House Congressional Picnic and was stunned by the news.
“Wow. Makes no sense. How are these results even possible???” Collins allegedly replied to the email.
Collins then allegedly shared the confidential test results with his son, who later sold more than 1.3 million shares of Innate in U.S. markets ahead of the June 26 announcement of the drug’s failure.
Collins lost roughly $17 million after the results were announced because he did not sell his Innate shares.
His son, however, allegedly avoided more than $570,000 in losses because of the alleged tip from the congressman who represents parts of western New York
Cameron Collins allegedly shared the test results with Zarsky.
Zarsky, who allegedly sold more than 300,000 shares of Innate after being tipped on the negative test results, has also been charged with securities fraud.
Collins and Zarsky are alleged to have shared the negative results with six other unnamed individuals, some of whom bought and sold Innate stock on their insider advice.
Chris Collins, his son and Zarksy are also alleged to have lied to federal agents in April about their advance knowledge of the test results.