Richard Burr avoided loss, made money on ‘well-timed’ stock deal, court records show

Court records released Tuesday reveal that Sen. Richard Burr avoided an estimated $87,000 in losses and gained more than $164,000 due to his “well-timed” stock sales at the beginning of the COVID-19 pandemic.

New information about a now-closed insider trading investigation into Burr and his family came to light Tuesday with the release of documents related to a search warrant that allowed investigators to seize and search Burr’s cell phone.

The Los Angeles Times first reported the Department of Justice investigated why Burr sold more than $1.6 million in stocks at the beginning of the COVID-19 pandemic. The court documents reveal that investigators believed Burr, his brother-in-law and sister-in-law may have sold off stocks based on confidential information Burr received in February 2020 as the pandemic was rising in the United States.

While the Department of Justice and Securities and Exchange Commission have both investigated Burr and his family, they have not filed any charges. The Justice Department probe, which produced the newly released documents, was completed with no charges filed.

The version of the search warrant materials made public Tuesday includes some information that previously was redacted and gives more insight into what caused investigators to look into decisions Burr made about his stocks.

On Jan. 31, 2020, Health and Human Services Secretary Alex Azar II declared COVID-19 a public health emergency in a news conference.

Burr sold nearly all of his stocks and around 61% of his wife’s stocks on two occasions: Jan. 31 and Feb. 13, with the January sales occurring before Azar’s announcement, according to court documents.

Burr’s brother-in-law, Gerald Fauth, told Fauth’s wife’s broker to sell “a significant amount” of their stock within minutes of speaking to Burr on Feb. 13, the court documents state. The sale of Burr and Fauth’s stocks on Feb. 13 happened nearly simultaneously, the records say. That was less than a week after Burr co-authored an article published on the Fox News website stating that the United States was better prepared than ever to respond to a pandemic.

The court records also note a voicemail and text message to Burr from an individual whose name is hidden in the document that preceded the senator making a series of calls and texts during the morning of Jan. 31, 2020 .

The court records indicate that Burr may have received information related to the pandemic that was not yet public that day. It is not legal for a member of Congress to use non-public information through their public positions to trade stocks.

Not long after those calls and texts, Burr’s trading account was accessed from an IP address that traced back to the U.S. Senate offices, according to the documents. Three minutes later, Burr authorized the sale of his stocks, the documents state.

Within five minutes of his authorization, two sell orders from the account of Burr’s wife were placed for 300 shares of AON PLC stock totaling $66,582 and another 95 shares of AON PLC totaling around $21,089, court records state. Another sell order from Burr’s IRA account sold off 300 shares of GCI Liberty Inc. for $21,976. The first is an insurance company and the latter is a telecommunications company.

Three hours and 40 minutes after the sales, Azar announced the public health emergency in a White House press briefing, the documents say. It was also revealed the United States was banning anyone who traveled to China in the past 14 days to enter the country.

During the start of this period, Burr publicly was expressing confidence that the United States could weather the virus. On Feb. 7, he tweeted the Fox News website article that he co-authored.

On Feb. 12, court documents state, Burr purchased nearly $1.19 million in U.S. Treasury funds. The FBI agent who applied for the warrant told the judge that the purchase of bonds is often done by investors to offset risks of a potential stock market downturn, the documents say.

To make the purchase, the Burrs used 76% of their total holdings in a joint account, but that did not involve the sale of stocks, the court records note

The court records also note that, “the Dow Jones closed at $29,551.42, which was its highest closing level ever.”

On Feb. 13, Burr directed nearly all of his and his wife’s stocks be sold from their IRA account The court documents state $262,884.35 in stocks were sold and represented 95% of Burr’s IRA account holdings. Stocks valued at around $804,341 were sold from his wife’s account making up 58% of her holdings.

Burr’s account was then accessed from an IP address linked to his in-laws’ home in Virginia.

After Burr and Fauth spoke on Feb. 13, the Fauths sold off stocks in Altria Group Inc., BP PLC , Chevron Corp., Mondelez International Inc. , Royal Dutch Shell and Williams Sonoma. Approximately $159,100 in stocks were sold from Budd’s sister-in-law’s account.

Much of the information surrounding Fauth’s trade is redacted but the DOJ in the documents notes that Fauth sounded hurried to sell off stocks in oil and energy companies and that he knew more about the stock market because of position and connections in D.C. Fauth serves on the National Mediation Board.

Six days later, as the seriousness of the pandemic became clear, the market experienced “a dramatic and substantial downturn,” court documents state.

By the end of February Burr was privately voicing a laundry list of concerns about the stock market, the court records state. On Feb. 27 he told those attending a Tar Heel Circle meeting at the private Capitol Hill Club that he believed COVID-19 would have a drastic impact on the economy. The conversation was recorded, according to the court documents.

FBI agents tried to interview Burr at his North Carolina home on March 28, but he refused to talk with them.

The Los Angeles Times learned about the Department of Justice investigation from an unnamed law enforcement official who tipped the newspaper off that Burr’s cellphone had been seized in May 2020, the newspaper reported.

In January 2021, Burr announced that the Department of Justice had ended its investigation.

“Tonight, the Department of Justice informed me that it has concluded its review of my personal financial transactions conducted early last year,” Burr told McClatchy. “The case is now closed. I’m glad to hear it. My focus has been and will continue to be working for the people of North Carolina during this difficult time for our nation.”

A month later, The Los Angeles Times petitioned the court to unseal all judicial records regarding the warrant obtained to search Burr’s phone. District Court Judge Beryl Howell of the District of Columbia denied the request.

But 10 months later, a different federal judge ordered Fauth to comply with a subpoena regarding the SEC’s parallel investigation into allegations of insider trading by Burr and his family.

Meanwhile, The Los Angeles Times continued to appeal its case.

In an order released Aug. 29, Howell said something had changed: The previously secret DOJ investigation was now public. Howell cited public admissions from the SEC, Fauth’s attorney, Burr and even the DOJ, which for the first time acknowledged its investigation and that search warrant materials existed.

DOJ submitted to Howell proposed redacted copies of the search warrant, the application for the warrant and records known as the supporting affidavit and the docket sheet.

Howell ordered DOJ to specify in detail why portions needed to be redacted. DOJ reduced the redactions to a degree, Howell said in an order. On Aug. 19, in a private hearing, the judge went through each line with DOJ to inquire why it was redacted.

Howell allowed some redactions to stand. They were intended to protect “third-party privacy” interests, financial information gained from third parties and private third-party witnesses, her order said. She also shielded descriptions of law enforcement techniques.

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