Ex-New York congressman pleads guilty in insider trading case

NEW YORK, Oct 1 (Reuters) - Chris Collins, a former U.S. Congressman from New York state who was known as an early backer of President Donald Trump, pleaded guilty on Wednesday to taking part in an insider trading scheme.

Collins, 69, entered his plea before U.S. District Judge Vernon Broderick in Manhattan the day after he resigned his seat in the U.S. House of Representatives.

He had represented New York's 27th Congressional District, which includes areas surrounding Buffalo and Rochester in western New York. He narrowly won reelection last November, three months after he was criminally charged.

The criminal case arises from Collins' role as a board member and 16.8% stakeholder of Australian biotechnology company Innate Immunotherapeutics Ltd.

Prosecutors allege that in June 2017, while attending the congressional picnic at the White House, Collins learned in an email from Innate's chief executive that the company's experimental multiple sclerosis drug, MIS416, had failed in a clinical trial.

Collins shared the news about the setback with his son, Cameron Collins, who in turn told his fiancée, Lauren Zarsky; her parents, Dorothy and Stephen Zarsky; and a friend, according to prosecutors. Stephen Zarsky went on to tip off additional unnamed people, the prosecutors said.

11 PHOTOS
Congressman Christopher Collins
See Gallery
Congressman Christopher Collins
U.S. Representative Chris Collins (R-NY) flashes a thumbs-up before delivering his nomination speech at the Republican National Convention in Cleveland, Ohio, U.S. July 19, 2016. REUTERS/Jim Young
Representative Chris Collins (R-NY) is seen on a screen as he delivers his nomination speech for Republican U.S. Presidential candidate Donald Trump at the Republican National Convention in Cleveland, Ohio, U.S. July 19, 2016. REUTERS/Mark Kauzlarich
UNITED STATES - JUNE 13: Rep. Chris Collins, R-N.Y., attends a House Energy and Commerce Communications and Technology Subcommittee markup in Rayburn Building on June 13, 2018. (Photo By Tom Williams/CQ Roll Call)
UNITED STATES - APRIL 11: Reps. Chris Collins, R-N.Y., right, and Kevin Cramer, R-N.D., attend a House Energy and Commerce Committee in Rayburn Building on the protection of user data featuring testimony by Facebook CEO Mark Zuckerberg on April 11, 2018. (Photo By Tom Williams/CQ Roll Call)
UNITED STATES - FEBRUARY 27: Rep. Chris Collins, R-N.Y., leaves the House Republican Conference meeting in the Capitol on Tuesday, Feb. 27, 2018. (Photo By Bill Clark/CQ Roll Call)
UNITED STATES - APRIL 26: Rep. Chris Collins, R-N.Y., leaves a meeting of the House Republican Conference in the Capitol on April 26, 2017. (Photo By Tom Williams/CQ Roll Call)
WASHINGTON, D.C. - FEBRUARY 16: (AFP-OUT) President Donald Trump participates in a congressional listening session with GOP members in the Roosevelt Room of the White House February 16, 2017 in Washington, DC. Also pictured is Rep. Chris Collins (R-NY). (Photo by Ron Sachs-Pool/Getty Images)
WASHINGTON, D.C. - FEBRUARY 16: (AFP-OUT) President Donald Trump participates in a congressional listening session with GOP members in the Roosevelt Room of the White House February 16, 2017 in Washington, DC. Rep. Chris Collins (R-NY) (3rd R). (Photo by Ron Sachs-Pool/Getty Images)
CLEVELAND, OH - JULY 19: Rep. Chris Collins (R-NY) delivers a speech on the second day of the Republican National Convention on July 19, 2016 at the Quicken Loans Arena in Cleveland, Ohio. An estimated 50,000 people are expected in Cleveland, including hundreds of protesters and members of the media. The four-day Republican National Convention kicked off on July 18. (Photo by Alex Wong/Getty Images)
CLEVELAND, OH - JULY 19: Rep. Chris Collins (R-NY) checks the sound while on stage prior to the start of the second day of the Republican National Convention on July 19, 2016 at the Quicken Loans Arena in Cleveland, Ohio. An estimated 50,000 people are expected in Cleveland, including hundreds of protesters and members of the media. The four-day Republican National Convention kicked off on July 18. (Photo by Alex Wong/Getty Images)
Erie County Executive Chris Collins (L) listens as New York State Governor David Patterson (R) speaks at a news conference along with other law enforcement agencies near the Emergency Training Center in Cheektowaga, New York February 13, 2009 in response to a Continental Flight 3407 that crashed with no survivors. REUTERS/Gary Wiepert (UNITED STATES)
HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

Chris Collins did not trade his own Innate stock, which lost millions of dollars in value. Prosecutors said the congressman was "virtually precluded" from trading in part because he already faced a congressional ethics probe over Innate.

However, prosecutors said Cameron Collins and the others used the insider information to avoid a total of more than $768,000 in losses when Innate's share price plunged 92% after news of the drug's failure became public.

Cameron Collins, 26, and Stephen Zarsky, 67, have been charged in the case and are scheduled to plead guilty on Thursday, court records show.

Lauren and Dorothy Zarsky were not criminally charged, but agreed to surrender the money they made selling Innate stock to the Securities and Exchange Commission under a civil settlement without admitting wrongdoing.

(Reporting By Brendan Pierson in New York Editing by Noeleen Walder and Bill Berkrot)

Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.