I seem to be a bit obsessed with Rep. Chris Collins (R-NY) who was indicted on Wednesday for insider trading with his 25-year-old son Cameron, and his son’s future father-in-law Stephen Zarsky. The case is fairly simple. Chris Collins used his position in Congress as a member of the Energy and Commerce Committee and the chair of the Health subgroup committee to get insider information on an obscure Australian biotech company.
Collins was the largest investor ($17 million) and a former board member of Innate Immunotherapeutics, a company which had developed a drug for multiple sclerosis. According to the The New York Times, “Collins had enticed at least seven former or current House Republicans into investing along with him, his two grown children and other friends.”
His son’s accountant fiancee Lauren Zarsky laid out the scheme “in a trail of text messages she sent to her mother saying, “they should invest in the company because they could make a huge profit on their investment, and there literally was no risk because Cam’s dad would keep them in the loop.”
And, that was what happened. It turned out that the drug trial was a failure, and thus the stock would become worthless. After Collins was notified of this (See SEC filing), he called his son Cameron to let him know, and Cam told his fiancee, her parents, and a few other relatives/friends who’d invested, and all seven of them dumped their stock, thus avoiding losses of about $768,000.
The story in The National Memo is worth reading. “CNN legal analyst and former New York prosecutor Paul Callan said, “It was the dumbest insider trade crime I’ve ever seen.”
“After Geoffrey Berman, the U.S. attorney for the Southern District of New York, laid out the damning evidence against Collins during a Wednesday press conference, CNN’s John King asked Callan: “Isn’t it pretty stupid to think you could get away with this?”
“It’s completely idiotic,” Callan confirmed. “The facts would seem to concur. Allegedly, Collins didn’t just engage in overt insider trading — he did so when he was already under investigation for insider trading by the House Ethics Committee.”
Representative Collins, Cameron Collins, and Stephen Zarksky have all pleaded not guilty. In a separate civil case, Lauren Zarksky and her mother pleaded guilty, and settled with the government.
“Six experienced defense attorneys spoke to The Buffalo News after the Collins indictment, all of whom suggesting that Collins and his codefendants face some difficult hurdles if they hope to walk away from the case without going to prison…The three men are accused of insider stock trading and lying to FBI agents.”
“If convicted of all charges, Chris Collins could face up to 150 years in prison, federal officials said. But under federal court sentencing guidelines, the actual prison terms are almost always far less than the maximum penalties.”
“It sets up a difficult dynamic for the family,” said Buffalo defense attorney Paul J. Cambria. “You may see a situation where prosecutors go to Chris Collins and say, ‘Don’t you want to save your son? We’ll give your son a good plea deal if you agree to plead guilty, go to prison and take the fall for your family.’ ‘I’ve seen it may times over the years. The ‘protect your family’ card is one that the government loves to play, and I’m sure they will play it in this case.’”
The bottom line is this: Chris Collins suspended his campaign from the House of Representatives yesterday to focus on his case. It’s possible that he and/or his son Cameron and future father-in-law will serve jail time. Cameron and the other investors will have to pay back the $768,000 plus penalties. Cameron’s fiancee Lauren Zarsky has either been fired from or she resigned from the big CPA firm where she was working.
This case is important because I believe it’s just the beginning of the indictments that Congressional Republicans, Donald Trump and his extended family, and other White House staffers and cabinet members will face for all their illegal activities during the Trump administration. And, like Trump and his extended family, what seems to have driven Collins is greed.
Or, perhaps it is more than that as F. Scott Fitzgerald suggests in one of his finest stories, The Rich Boy, which was published in 1926.
“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different. ”
Do you have any thoughts on this case? Do you think the Culture of Corruption should be a talking point for the midterm elections or should Democrats ignore it?
(This is a rewritten version of my original diary, which I wrote late last night, and seemed a bit confusing in the light of day.)