NY-27

Republicans are confident they can ensure the name of Rep. Chris Collins is not on the November general election ballot, Erie County Chairman Nick Langworthy said Tuesday night after a closed-door meeting of the eight GOP chairs in the NY-27 at Batavia Downs.

He didn't say, however, how the might get the task done. He went no further than promising that Collins, in the midst of fighting federal allegations that he engaged in insider stock trading, will cooperate with whatever method the party tries to implement. 

"We have communicated back and forth through his team but I have not directly personally spoken to him," Langworthy said. "We are confident there are mechanisms in place where his name can be removed from the ballot and we can nominate a new candidate."

Collins didn't face a challenger in the June 26 primary for the NY-27 but he committed to the race at an even earlier date. Once petitions were gathered, he had until April 16 to decline the nomination and the party had until April 24 to fill the vacancy.

Three Methods to Remove Name from Ballot

That leaves three methods to remove his name from the November ballot: Disqualification by means of accepting another office, moving out of state, or death.

Collins reportedly has residential property in Florida he could declare his legal domicile and there are potentially town-level offices in Erie County with a vacancy he could fill.

Either move will almost certainly be challenged in court by the Democrats.

“The GOP chairs are in a very bad position," said Todd Aldinger, an Albany-based attorney who has researched the relevant law and served as chairman of the Erie County Charter Revision Commission and was Senator Patrick Gallivan’s legislative director.

"They will either have to rely on constitutionally dubious means to remove Collins from the ballot or will have to utilize provisions of the election law to circumvent the normal nomination procedure by nominating Collins for a manufactured vacancy, which a court may find to be void against public policy.”

In favor of the GOP effort to remove Collins is a 2008 case in the NY-26 race, which at the time included Genesee County. In the Matter of Kryzan v New York State Bd. of Elections, Jon Powers had won the Working Families Party line and Alice Kryzan was the Democratic nominee. Powers then moved out of state and after the ballot certification deadline Powers sought to have his name removed from the ballot and the WFP wanted to replace his name with Kryzan. A court ruled Power's name could be removed from the ballot and replaced by Kryzan.

That decision was later overturned because absentee voting had already started.A federal court ruled those voters who already received their ballots would be disenfranchised if Kryzan's name replaced Powers on the ballot.

The November ballot won't be certified until Sept. 13. Military ballots will go out in the mail Sept. 21. The GOP will, presumably, have until then to win any legal battle with the Democrats or they lose the fight and potentially the war.

To counter any GOP maneuver -- declaring Collins a resident of another state or appointing him to a dog catcher position in Erie County -- the Democrats might be able to counter that such a move has been made in bad faith or to circumvent the normal nomination process.

The relevant case law, however, isn't on point with this set of circumstances and has apparently not been tested before.

"We are very confident, consulting with what are some of the best election lawyers in the State of New York, that there are mechanisms in place to remove Congressman Collins from the ballot," Langworthy said.

Even before Langworthy met with the press outside of Batavia Downs, Michael Plitt, chairman of the Genesee County Democratic Committee, was texting The Batavian to decry the GOP chairman's efforts to remove Collins from the ballot.

"The GOP already picked their candidate, Chris Collins," Plitt said. "There are no do-overs. Petitions are in. Collins will be on the ballot. The GOP knew Collins had an ethics investigation."

That's a similar line of attack the Democratic nominee, Nate McMurray, is taking in tweets and news interviews.

Democrats Call for Accountability

"I think these guys should be held accountable," McMurray told The Hill. "They shouldn't be able to hit reset or take a mulligan. If they try to get him to run for another office, I will call it out for what it is: a fraud upon the United States."

While the statutory feathers fly, the eight GOP chairs of the NY-27 are moving ahead with the process of handpicking a new candidate. At one point, at least 15 people had expressed an interest in the seat but Tuesday night, Langworthy indicated the winnowing process has already begun. He said he expects there will be some more informal interviews to help determine who gets a chance to sit down with all eight county chairs and lobby for the nomination.

Those interviews will take place next week.

"We were handed the extraordinary situation that you know we're not happy to find ourselves in, but we have to work through it," Langworthy said. "We have to work together. We have to work collaboratively and we need to nominate a candidate that can succeed in all eight counties to deliver a victory in November."

The public won't be part of the committee process and voting will be weighted, which means Langworthy, representing Erie County, will have the biggest say in who potentially could appear on the R line in November.

It's a momentous selection.

Michael Caputo, a GOP political consultant, and nationally known Trump ally, told The Batavian just before news broke that Collins was withdrawing from the race, that the very future of the presidency may hinge on what happens in the NY-27.

"It may boil down to one or two seats," Caputo said. "If we lose control of the house, there will be impeachment proceedings, no doubt about it."

Erie County GOP's Questionable Candidates

Erie County, however, doesn't have a strong track record when it comes to picking representatives for the GLOW region.

Rep. Bill Paxon's career ended after he helped lead a failed attempt to oust Newt Gingrich as Speaker of the House. Rep. Tom Reynolds didn't run for reelection after his name was linked to a couple of scandals in the House. Rep. Chris Lee posted a bare-chested picture of himself on Craigslist. Assemblywoman Jane Corwin lost a race generally thought to be hers to lose.

And now Chris Collins, federally indicted on counts of securities fraud, wire fraud, and lying to the FBI. Collins was allegedly the tip of a tipping tree where he provided the crucial tidbit of bad news that caused his son, and eight other associates, to dump millions of shares of Innate Immunotherapeutics Limited before the Australia-based company publicly announced its only product, a drug to treat secondary progressive multiple sclerosis, had failed its critical medical trial.

Collins said he's not guilty.

Langworthy said none of the GOP chairs have expressed any dissatisfaction with the process that has led to this string of questionable GOP candidates being foisted on GLOW.

"I think it's a matter of the party rules," Langworthy said. "I think we work collaboratively. We're working together. Many of the candidates now hail from the GLOW region, so I didn't hear any sort of problems from any of the chairs here tonight about them."

Whoever gets the pick will instantly become the front-runner in a district that tilts +22 for Republicans, and barring the winner getting caught with his shirt off or making ill-advised stock trades, he is likely being appointed to the seat for life. The Batavian asked Langworthy if a process of eight men in a room, denying both candidates and voters the normal primary process to fill a vacancy, is the right process to follow.

"I'm going to ask you, do you think we want to be in the situation right now?" Langworthy said.

The Batavian asked, "is it fair?"

"I think it's a bush league question you asked," Langworthy said.

"So you don't want to answer it."

Langworthy: 'We Don't Want to Be Here.'

Langworthy responded, "I've already addressed this. We find ourselves in an extraordinary situation. We don't want to be here. This is a sad and unfortunate time for us. We are doing the best we can with the election law as it exists at this late date."

The choice for the chairs includes inexperienced candidates, candidates who have run a race but not won, or a slate of current office holders who would be forced to vacate a ballot line creating a new legal challenge for the party.

"I'll let you all decide who you think the front-runners are," Langworthy told the gaggle of assembled reporters from throughout the region. "We have a process to maintain. We have to continue to work together.

"You know there are candidates from throughout this district that represent different portions of this district. We're all dedicated the same thing, which is finding a conservative Republican candidate that can win this district and help President Trump achieve his agenda.

A bit later Langworthy said: "We need we need a candidate that we can all get behind in eight counties (who) can be out there meeting the voters, talking about the important issues. I mean it's a very geographically diverse district.

"I mean, you have cities, you have suburban towns, you also have a lot of rural and agricultural areas, so you have a lot of different types of people who (need to) get up to speed on federal issues. Even if they're a state official, they might not understand the federal ramifications. Those are things that we have to hit the ground running on very, very quickly."

It will be such a difficult race in such a compressed time frame that Langworthy doesn't think it's the place for novices to enter.

"I personally think that this is probably not the time for a completely new candidate, someone that doesn't understand the political process or maybe hasn't been a part of an election before in a big league level," Langworthy said. "I don't think there's a lot of time for a learning curve for a first-timer that hasn't been through the process."

White House Weighs in on Selection 

Langworthy also revealed that the White House is weighing in on the selection process.

"We're in consultation," Langworthy said. "Yesterday I had a meeting with the White House political director to discuss this race. We have been in discussions with the executive director of the National Republican Congressional Committee. They are very concerned about the future of the seat. They want to make sure it stays in Republican hands."

Whoever gets the nod from the eight chairs, Langworthy said he hopes to attract Trump to WNY to campaign for the candidate.

"I came from Utica yesterday where I saw President Trump come in for a Congresswoman Tenny," Langworthy said. "It's a very hot seat and I know they raised an awful lot of funds in a short window. It was only a one week lead-up to the event and there were hundreds and hundreds of people there showing their support and writing checks to support the congresswoman. I would love to see that sort of enthusiasm with a presidential visit."

Press release:

Now that Chris Collins has withdrawn in the NY 27th District race, Larry Piegza is demanding to be considered for the Republican, Independent and Conservative Party endorsements. He has already earned the endorsement of the Reform Party in the June primary and is now looking to secure the other nominations as well.

“I’ve been trying to get support from the Republican Committees in this district since November and they won’t return my call. Even now that Chris Collins has been arrested they still won’t give me an interview. This is just another example of the corrupt, pay-for-play Republican committees not caring about their district.

“The District’s GOP establishment failed to admit that Collins was a criminal in the first place. Then also tried their failed election scam of getting the fake Green Party candidate Michael Zak on the ballot. I think it’s time that we voters demand an open process for choosing Collins’ replacement instead of letting the corrupt establishment tell us which crony we have to vote for next.

"I am only one of two candidates chosen by the fair election process and have already stated that I am willing to give up my entire congressional salary if I get elected. Instead of endorsing me, they are jumping through legal hoops to try to get their next establishment crony on the ballot. The voters don’t want a rigged election. If we are going to Make America Great Again, we have got to really drain the swamp at the district level as well," Piegza said.

Press release:

Chris Collins’ decision to suspend his campaign is good news for New York State and good news for America. This will be a trying time for him and his family but the era of corruption he represents must come to an end.

"This tragic tale is yet another example of how a corrupt party machine has consistently betrayed the people of the 27th Congressional District," Democratic congressional candidate Nate McMurray said today.

“It’s absolutely true that Chris Collins should not be running for this or any other seat, a fact that the local Republican Party knew full well when they endorsed and celebrated him while he was under investigation for securities fraud,” McMurray said.

“And now the same machine that relentlessly attacked me for daring to question Mr. Collins’ record is attempting to get rid of him while gaming the system in order to hold on to a seat they can no longer win,” McMurray said. “New Yorkers and Americans are sick of this kind of charade and they are right to be.

“And it is a continuing disgrace that both parties have not said, with one clear voice, 'resign, Mr. Collins, and do it today.’ Well, let me do it for them: Mr. Collins, a suspension is one thing but it is time for you to resign. Do it today.”

McMurray said that Collins’ arrest earlier this week on insider trading charges has brought attention to a race and a region previously overlooked by national media and political insiders.

“Pundits who a week ago couldn’t pronounce my name or tell the difference between Hamburg, New York and Hamburg, Germany are now laser-focused on this campaign,” McMurray said.

“But my focus has never wavered. I want to be an independent voice for the people who work two jobs and still struggle to meet their mortgage and their health care bills, the forgotten working and middle-class families who will pay the price for the tax cuts and insider deals that make Chris Collins and his friends rich. I know what it is to struggle, and I want to help others in their struggle as well.

“In a sense, the contest for the 27th has changed dramatically in the past few days but fundamentally the issues are the same,” McMurray said. “It’s still about breaking a failed system that serves itself and putting the power back in the hands of the people. That’s what I have stood for since Day 1, and that’s what I will stand for come January 1 in Washington, D.C.”

Press release:

Democratic leaders called on Rep. Chris Collins (NY 27) to resign immediately, in the wake of his announcement that he was suspending his reelection campaign. They also decried the corrupt process of suddenly removing him from the ballot, long after the deadline for changing the ballot had come and gone.

Once again, the Republican establishment of NY 27 is making the interests of the voters play second fiddle to the desires of their own party to retain a stranglehold on power, no matter what. Jamie Romeo, Monroe County Democratic Chair, noted that "Chris Collins has been under an ethical cloud for over a year -- under a congressional ethics investigation -- but the Republican leaders thought it was just fine to have him on the ballot until a few days ago. It's only when they figured out that this seat was in jeopardy that they decided Chris Collins had to go."

Judith Hunter, the Livingston County Democratic chair, said "Republican bosses are absolutely taking the voters of NY 27 for granted again. The federal ballot is set; at least one county in the district has already printed them. But these arrogant power brokers think this seat is theirs to play with and have come up with a corrupt, legalistic sleight of hand without any input from the voters of NY 27. It's shameful."

Michael Plitt, the Genesee County Democratic chair, asked the obvious questions: "If Chris Collins' arrest is serious enough to make him suspend his campaign, why isn't it serious enough to make him resign? We're going to be saddled with a lame duck representative under criminal indictment who has been stripped of his committee assignment and any power in Congress, for what? His arrogant ego? It's a disgrace."

Michelle Schoeneman, of East Aurora, founder of Citizens Against Collins, says she is absolutely outraged: "The arrogance of Chris Collins insisting he is going to serve his term out is beyond belief. And the arrogance of the Republican bosses thinking they can just wave a magic wand and replace him on the ballot is equally outrageous."

"We Democrats are fortunate to have Nate McMurray as our candidate for NY 27," said Jeanne Crane, the Democratic chair of Orleans County. "We know he's going to put the interests of the voters first, whatever he does. He cares about the hard-working middle-class people of this district need, not what shady power brokers want."

The tweet that changed the complexion of the NY-27 congressional race had barely reached all of the followers of @repchriscollins before Republicans with aspirations to serve in Congress started declaring their interest in replacing Rep. Chris Collins on the GOP line of the November ballot.

Dick Siebert, chair of the GOP in Genesee County, said he's already heard from three candidates, including two from Batavia -- Steve Hawley and David Bellavia.

It will be up to the county chairs in the NY-27 -- given that the primary season is already past and it's less than three months to Election Day -- to pick whose name goes on the R line instead of Collins.

That is if a legal way can be found to get the incumbent's name off the ballot. Possibilities include, or so we are told, finding another elected office to appoint Collins to, such as a judgeship, or having Collins declare permanent residency in Florida.

"My reaction?" Siebert said when asked for his reaction to Collins suspending his campaign. "I was relieved that he did it. It was the right thing to do."

This morning, well before Collins announced he was getting out of the race, The Batavian interviewed Michael Caputo, a GOP political consultant from Buffalo and a close ally of President Donald Trump. Caputo talked at length about all the ways Collins staying in the race harmed Republicans and threatened the very survival of Trump's presidency.

"The scandal and prosecution are in small but profound ways a bad reflection on the president," Caputo said. "I don't think Chris Collins will ever darken the doorstep of the Oval Office again."

The president, Caputo said, learned a powerful lesson when he looked past allegations against Judge Roy Moore in the run-up to his Alabama Senate race about the Republican candidate's reputation for chasing teenage girls. 

Caputo said the closer he gets to Collins at this point, the greater the risk it will blow back in his face and he doesn't want a repeat of the Roy Moore fiasco.

"The president is inclined to look past mere partisan allegations because he weathers so many of those himself, but this 30-page indictment of the wealthy trying to preserve their wealth, it's a terrible look in the New York 27th, where the vast majority of voters are low to middle class on the economic scale," Caputo said.

It was Caputo who first introduced Trump to Collins in 2014 when Trump was considering a run for governor. Collins endeared himself to Trump during the 2016 campaign by being such a strong defender of Trump in television appearances but all that goodwill evaporated when Collins was arrested.

Then Collins became a liability, both because of the perception of his close proximity to the president, and because there is a recognizable danger of Republicans losing control of the House in the midterms.

"It may boil down to one or two seats," Caputo said before we knew Collins was dropping out of the race. "It may boil down to Nate McMurray and Chris Collins. If we lose control of the house, there will be impeachment proceedings, no doubt about it."

In an analysis of data about scandal-plagued incumbents running for reelection, the political prognostication site 538 gives Collins a slender 2 or 3 percentage point chance of winning the election in November.

With the race potentially cut down to a margin of two or three points, Caputo thought it would be a hard race for Collins to win without an energized base. He was already seeing rank-and-file party leadership peeling away from Collins since his arrest.

Collins would not be able to run an effective campaign without squarely addressing the allegations, which at his Wednesday press conference he was unwilling to do, Caputo said. Every time he appeared in public, the press would be there and the lasting image, if Collins wouldn't answer questions, would be of him running away from reporters.

And his own supporters wouldn't have been willing to defend him, then, in their neighbor-to-neighbor conversations.

"One by one, they (would) drop away and in the end, he (wouldn't) have the people to mount an effective get-out-the-vote effort," Caputo said.

That is the kind of tough-love analysis Collins probably heeded when he said in his withdrawal statement, "After extensive discussions with my family and my friends over the last few days, I have decided that it is in the best interests of the constituents of NY-27, the Republican Party and President Trump’s agenda for me to suspend my campaign for reelection to Congress."

The process for picking GOP congressional candidates for the GLOW region is heavily weighted toward Erie County and that process over the past decades has given us: Tom Reynolds, who retired under a cloud of scandals involving Rep. Mark Foley and the treasurer of National Republican Congressional Committee while Reynolds was chair; Chris Lee, who resigned after he was reportedly trolling for transgender women on Craigslist; and now, Chris Collins, accused of insider trading.

It's too soon to know if there are other GLOW-based candidates who might be interested in the seat beside Hawley and Bellavia, but there are Hawley and Bellavia. 

Steve Hawley, a six-term member of the state Assembly, was born and raised in Batavia, is a farmer, local business owner and was a member of the Ohio Army National Guard and the United States Army Reserves.

"Collins has suspended his campaign, whatever that means, but it's not clear if that means his name stays on the ballot or there may be some way to get his name off the ballot," Hawley said. "If that were to occur, I am proud to continue serving and helping people at any level of government and this is something I will look at if it comes up and certainly make a strong push for it."

David Bellavia was born and raised in Buffalo but is a longtime resident of Batavia. He is an American Iraq War veteran who was awarded the Silver Star for his actions during the Second Battle of Fallujah, along with other military awards and honors. He is currently a talk show cohost on WBEN. He lost a 2012 primary race to Collins, though he beat Collins in every county but Erie and Niagara.

"This is something I've dedicated 10 years of my life to doing," Bellavia said. "I'm committed myself since 2012  to correct my deficiencies in Erie and Niagara counties. I'm ready to run."

Previously:

• Chris Collins suspends campaign for Congress
• For area GOP chairs, uncertainty hangs over NY-27 race after arrest of Chris Collins
• Collins has reportedly used campaign funds to pay legal fees amidst ethics and criminal investigations
• In criminal indictment, Collins accused of lying to FBI about substance of conversation with his son while on phone at White House
• Collins mum on substance of insider trading charges, refuses to take questions at press conference
• Reform candidate for NY-27 responds to arrest of Chris Collins
• SEC complaint against Collins reveals alleged insider trading saved sellers $768,600
• McMurray responds to arrest of Rep. Chris Collins
• Chris Collins reportedly indicted by federal grand jury on insider trading charges

Rep. Chris Collins announced this morning that he has dropped out of the race for the NY-27 congressional seat.

“After extensive discussions with my family and my friends over the last few days, I have decided that it is in the best interest of the constituents of NY-27, the Republican Party and President Trump’s agenda for me to suspend my campaign for reelection to Congress,” he wrote in a statement posted on his official Twitter account.

Collins was arrested Wednesday morning on federal charges of securities fraud, wire fraud, and lying to the FBI.

UPDATE: The congressman's press office just issued this statement:

"Democrats are laser-focused on taking back the House, electing Nancy Pelosi Speaker and then launching impeachment proceedings against President Trump. They would like nothing more than to elect an 'Impeach Trump' Democrat in this District, which is something that neither our country or my party can afford.  

After extensive discussions with my family and my friends over the last few days, I have decided that it is in the best interests of the constituents of NY-27, the Republican Party and President Trump’s agenda for me to suspend my campaign for reelection to Congress.  

I will fill out the remaining few months of my term to assure that our community maintains its vote in Congress to support President Trump’s agenda to create jobs, eliminate regulations, reduce the size of government, address immigration and lower taxes.

I will also continue to fight the meritless charges brought against me and I look forward to having my good name cleared of any wrongdoing.”

On a personal level, the insider trading charges against Rep. Chris Collins are disappointing, said Richard Siebert, chairman of the Genesee County GOP, but it will be up to members of his committee to decide how local Republican leadership should respond to the allegations.

He said the executive committee will meet Aug. 20 to discuss their options, which would include everything from standing by there man or asking him to resign.

The case against Collins, Siebert conceded, looks pretty strong but he also believes that in this country, we support the rule of law and a person is innocent until proven guilty.

He understands, though, not all voters are going to see it that way and that could make it hard for Collins to get out in the district over the next three months and battle for re-election.

"It's a tough situation to campaign in with this hanging over your head," Siebert said. "The people in Genesee County are tough people and they don't like scandals and they don't like to feel betrayed so I wouldn't want to be in his shoes right now."

Ellen Grant, chair of the GOP in Wyoming County, said she is also waiting to see how things play out, with a similar belief in America's justice system but recognizing the case presented by federal prosecutors doesn't look good for the incumbent congressman.

"I was very surprised and very dismayed by the news," Grant said. "It seemed like a strong case that was put forth in New York City. I listened to the timelines they presented and the other information but I also understand people have an opportunity to rebut and refute and that everyone is innocent until proven guilty."

She understands, she said, that these charges were just filed and Collins has a lot on his plate but she was disappointed in his press conference in Buffalo on Wednesday. While he proclaimed his innocence, she noted, he provided no information that might convince constituents to believe him.

"I don't know when he might make any further statements beyond what he has said but I'm hopeful more information will come out to assure voters and the people in the party who are working for his re-election so he can continue to be our representative as a candidate and a congressman and do those jobs well."

As an elected official holding national office, Collins is in the public eye, she said, so "you have to prove your innocence instead of just proving you're not guilty to retain the public's confidence."

In Orleans County, GOP County Chair Ed Morgan said the future of the congressman is entirely up to him.

"My opinion, my stance is, we're in American and in America, you're innocent until proven guilty," Morgan said. "He's in the driver's seat. He can stay in the race if he wants. He is still our congressman and I will still back him and wait and take a deep breath and in a week (when his committee will meet) we'll see what our options are."

Morgan said he sees the legal issues faced by Collins as separate from his position and our congressional representative.

"This is not a congressional issue," Morgan said. "It's more of a legal issue. I think he's done a great job for the area and I think he would continue to do a great job. I'll keep an open mind. Our county is one of the smaller ones but one of the more heavily Republican ones."

The only other GOP county chair The Batavian tried to reach is Nick Langworthy from Erie County. We have placed calls yesterday and today and sent him a text message and have gotten no response.

Morgan also questioned the timing of the charges, just three months before an election, and wondered if they might be politically motivated (for the record, the prosecutor in the case is a Trump appointee) but Dick Siebert had a different take on the timing of events.

He wonders why Collins didn't alert the county chairs sooner about the pending investigation. The allegations stem from June 2017, months before Collins asked local party members to start passing around petitions for his candidacy (though it's hard to know when Collins became aware of the federal criminal investigation, he certainly knew as far back as April 25 and the news of his arrest caught everybody by surprise).

"If we had known before," Siebert said, "It would have given Chris a chance to explain himself before we decided whether to endorse him."

As for Siebert's own take on the allegations, he's been pretty unhappy since the news came out, he said.

"Right now from everything I've seen of the evidence, and what I watched of the proceeding when the charges were filed, there is no doubt about it, it's very disturbing," Siebert said. "It's very damning. This is not what you expect from a congressman or any elected official for that matter. In Genesee County, I'm proud of all the people we've helped get into office. We run clean campaigns. We've had no scandals in Genesee County in my 44 years and so I'm disappointed in our congressman."

Previously:

• Collins has reportedly used campaign funds to pay legal fees amidst ethics and criminal investigations
• In criminal indictment, Collins accused of lying to FBI about substance of conversation with his son while on phone at White House
• Collins mum on substance of insider trading charges, refuses to take questions at press conference
• Reform candidate for NY-27 responds to arrest of Chris Collins
• SEC complaint against Collins reveals alleged insider trading saved sellers $768,600
• McMurray responds to arrest of Rep. Chris Collins
• Chris Collins reportedly indicted by federal grand jury on insider trading charges

CNBC reported today that Federal Election Commission records show that Rep. Chris Collins has been using campaign funds to pay attorneys while under investigation for alleged insider trader acts.

The records indicate Collins has used donor money to fund up to $60,000 of his legal defense.

The payments were made to the legal firm of BakerHostetler.

The use of campaign funds to pay for legal fees is legal.

These legal fees covered the time period of two separate House probes, including one by the Office of Congressional Ethics and another by the House Ethics Committee.

A spokesman for the Collins legal team confirmed that the payments from the campaign were for the investigation by the nonpartisan Office of Congressional Ethics and an ongoing inquiry by the House Ethics Committee. Going forward, the congressman will pay for his legal bills out of his own pocket, the spokesman added.

 NOTE: In our previous coverage of the allegations of insider trading against Rep. Chris Collins, we cited a government document as a "criminal complaint." This was an oversight on our part and we subsequently corrected those stories to indicate we were referencing a civil complaint filed by the Securities and Exchange Commission. This story is based on the indictment against Collins and his co-defendants. To read the indictment yourself, click here.

Of the 10 or so people who allegedly took part in an illegal tip tree, giving them an opportunity to dump their stock holdings in Innate Therapeutics before public disclosure that a critical medical trial had failed catastrophically, only three among the 10 face criminal charges. 

Two of the alleged conspirators -- Lauren Zarsky and Dorothy Zarsky -- have reportedly admitted to the SEC that they engaged in insider trading and have agreed to return their "ill-gotten gains."

The SEC settlement is a civil matter. Neither of the women has been charged, at least so far, with a criminal offense.

The three men at the top of the alleged tip tree, however, could go to prison, if convicted, for up to 20 years.

They are, Rep. Chris Collins, his 25-year-old son Cameron Collins, engaged to Lauren, and Lauren's father, the 66-year-old Stephen Zarsky. They are charged with conspiracy, securities fraud, wire fraud, and making false statements to FBI agents.

According to the criminal indictment, the narrative of how Chris Collins came to be accused of insider trading begins with an email he received at 6:55 p.m., June 22, 2017. Collins was at the annual Congressional Picnic on the lawn of the White House when he reportedly read a message from Innate's CEO, who is Simon Wilkinson, according to the company's website.

"I have bad news to report," Wilkinson wrote. "The top line analysis of the 'intent to treat' patient population (i.e., every subject who was successfully enrolled in the study) would pretty clearly indicate 'clinical failure.' "

He continued, "Top-line 12-month data ... show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo."

The email concluded, "No doubt we will want to consider this extremely bad news."

Collins responded at 7:10 p.m., according to prosecutors, "Wow. Makes no sense. How are these results even possible???"

He is then suspected of immediately attempting to contact his son. He called Cameron twice. Cameron called back three times. Chris Collins called him back. On their seventh attempt to connect, at 7:16:19 p.m., father and son finally spoke with each other. 

Video has surfaced that shows Collins pacing on the White House lawn at 7:17 p.m. talking on his mobile phone.

Chris and Cameron spoke for six minutes and eight seconds.

The indictment alleges the congressman revealed that the MIS416 trial failed, disclosing nonpublic information, knowing it was a breach of his duties and anticipating his son would trade on the information and tip others.

When Cameron Collins allegedly learned of the clinical trial failure, the over-the-counter market in the United States was closed.

At 7:42 a.m. the next morning, Cameron Collins placed an online order to sell 16,508 shares of Innate. The order was executed at 9:30 a.m. when the OTC market opened.

As the day worn on, Cameron allegedly placed 17 more orders to sell. He's accused of placing 36 more on Monday. 

During this flurry of trading, Chris Collins and Cameron Collins spoke on the phone several times, prosecutors allege. During one five-minute conversation, while still on the phone, Cameron Collins allegedly placed an order to sell 50,000 shares.

In all, he sold 1,930,500 shares during this trading binge. In all, he sold 5.2 million shares, according to federal documents. As a result, he allegedly avoided a loss of $570,900.

In the days before the CEO learned of the clinical trial failure, the future of Innate looked much brighter after the FDA cleared Innate to open what's called an Investigational New Drug application. That clearance moved Innate one step closer to a public release of its new multiple sclerosis drug. 

The company announced the good news June 21.

A few days earlier, on June 19, Lauren Zarsky used her online brokage account for the first time ever to buy Innate stock, grabbing 40,464 shares over a two-day period. 

According to the indictment, Lauren Zarasky didn't even own Innate stock for a full week. At 9:37 a.m., June 22, after reportedly meeting with Cameron Collins at her father's house, Lauren sold her entire Innate portfolio.

Lauren Zarsky avoided losses of $19,440 with the timely sale of her stock.

Lauren Zarsky has not been charged criminally. A spokesman for the Southern District in New York of the U.S. Attorney's Office said he was not permitted to discuss whether or not Lauren Zarsky has cooperated with investigators. 

Before Cameron Collins started his alleged stock dump, he went to the home of Stephen Zarsky, the indictment alleges and met with Stephen Zarsky, Lauren Zarsky, and Dorothy Zarsky.

According to prosecutors, Cameron disclosed information about the failed trial and informed the family that he would sell his shares but give the Zarskys a chance to unload their shares first out of concern that his share dump could potentially depress the share price. The indictment doesn’t reveal how investigators learned the substance of the conversation.

That night, at 9:34 p.m., before trading of Innate shares were halted in Australia, Dorothy Zarsky called her brokerage. A telephone rep walked her through the process of executing an online trade in Australia. That night, she sold 30,350 of her 50,000 shares on the ASX market. The next morning, she sold her remaining shares in the U.S. over-the-counter market. She avoided $22,600 in losses.

At 7:52 a.m., June 23, Stephen Zarsky allegedly contacted his broker and placed an order to sell his 303,005 shares at no less than 41 cents a share. That was well below the previous day’s closing price of 52 cents per share. His shares sold at 9:30 a.m. for 51 cents a share. Stephen Zarsky allegedly avoided $143,900 in losses.

Cameron Collins allegedly contacted another trader the morning of June 23 who immediately sold his holdings to avoid a loss of $680.

That same morning, Stephen Zarsky allegedly contacted three other people, including his brother, who held Innate stock.

Without disclosing how investigators know the contents of Stephen Zarksy's call to his brother, the indictment says that Zarsky advised his brother to sell his stocks. Investigators say Zarsky's brother concluded, without being told, that Zarsky had insider information from the Collins family, and sold his shares, avoiding a loss of $4,200.

The indictment also recounts a text message conversation Zarsky had with his brother (image at the top of this story), discussing two other traders who were allegedly advised to sell but didn’t.

Another Zarsky contact allegedly sold his shares and avoided losses of $6,700. 

During one conversation with an Innate stock owner, Stephen Zarsky reportedly told the person that Cameron Collins intended to purchase a house so he would have an excuse for the timing of his Innate trades if they ever came to light. That person Zarsky spoke with allegedly avoided $6,700 in loses.

Chris Collins is accused in Count Eleven of the indictment of lying to an FBI agent on April 25. He is accused of telling the agent that he did not pass along to Cameron Collins the confidential information before its public release that the drug trial had failed.

Cameron Collins was also interviewed by an FBI agent on April 25. He is accused of lying about his conversation with his father and lying about his knowledge of Stephen Zarsky’s Innate holdings.

Stephen Zarsky is accused of lying to a special agent of the FBI on April 25 by stating that he sold his Innate stocks solely because of his concern that Innate was too risky of an investment; that the investment had been recommended by a friend in Connecticut; that he didn’t know whether Cameron Collins had sold any shares, and that he did not know the drug trial results or discuss them with Cameron Collins prior to the public announcement.

With barely a mention of the insider-trader charges he is facing, Rep. Chris Collins held what was billed as a press conference at the Embassy Suites in Buffalo on Wednesday evening and vowed to fight vigorously to clear his name.

He called the charges -- detailed at length earlier Wednesday in a 22-page Securities and Exchange Commission civil complaint -- "meritless" but offered no details on why he believes he has been unfairly charged.

With his wife, Mary Sue, standing placidly by his side, Collins held forth for nearly seven minutes on: his successes in business; his record as Erie County executive; his belief in the company at the heart of the insider trading allegations -- Innate Immunotherapeutics Ltd.; and his hope of finding a treatment for secondary progressive multiple sclerosis.

"I believe I acted properly and within the law at all times with regard to my affiliation with Innate throughout my tenure in Congress," Collins said. "I have followed all rules and all ethical guidelines when it comes to my personal investments including those with Innate. 

"I look forward," he added later, "to being fully vindicated and exonerated, ending any and all questions relating to my affiliation with Innate." 

After vowing that his name will be on the ballot for the NY-27 election in November, Collins walked off stage and refused to acknowledge reporters' questions.

The man prosecuting Collins, Geoffrey Berman, U.S. Attorney for the Southern District of New York, a Trump appointee, was far more detailed in a press conference in New York City earlier in the day. Berman and other federal law enforcement officials talked for nearly 30 minutes about the scheme they allege Collins enabled by his failure to keep confidential information he was legally and ethically bound to not share with anyone, not even his son.

According to Berman, however, as soon as Collins received the devastating news that a clinical trial for a promising MS drug developed by Innate had failed, Collins -- while attending a Friday afternoon Congressional picnic at the White House -- repeatedly attempted to call his son, Cameron Collins, a major shareholder of Innate stock. When he finally reached him -- while Collins was still pacing on the lawn of the White House -- father and son spoke by phone for six minutes.

That unleashed, Berman said, a frenzied four days of insider trading as the "tip tree" allegedly headed by Collins, got to work passing on info and dumping stock as soon as each member of the tip tree found out about the failed trial. Cameron managed to unload more than $570,900 in Innate stock that would become nearly worthless once the results of the trial were finally released the night of June 26, a Monday, by Innate.

"Congressman Collins couldn't keep his crime a secret forever," Berman said. "The FBI asked to interview him. And instead of telling the truth, he lied. And so did Cameron Collins and so did Stephen Zarksy. By lying to the FBI, they compounded their insider-trading crime with the crime of criminal cover-up."

The tip tree allegedly involved Cameron's girlfriend, a CPA, her father, her mother, along with other friends and family members.

Cameron Collins' girlfriend, Lauren Zarsky, and her mother, Dorothy Zarsky, have already settled with the SEC, admitting to their role in the insider-trading scheme and promising to pay back their "ill-gotten gains." Lauren Zarsky will also be prohibited from working as a CPA before the commission for five years.

"Accountants who engage in illegal insider trading should not serve in the role of gatekeeper in our securities markets," said Stephanie Avakian, co-director of the SEC.

The investigation into the alleged tipping tree began, according to Steven Peikin, head of the enforcement division of the SEC, after regulators noticed the unusual trading pattern of Cameron Collins.

According to the civil complaint, Cameron Collins, who at one time owned 5.2 million shares of Innate stock, initiated dozens of trades in increments small enough to avoid depressing the stock price but at high enough volumes that he could quickly unload all of the Innate stock he held in a U.S. brokerage. 

"When members of the market abuse unit, a specialized group within the division of enforcement, uncovered suspicious trading by Cameron Collins they did not stop there," Peikin said. "As you heard, they identified well-timed trades by people close to him including his girlfriend, her mother, her father and her father's relative and a friend."

According to Peikin, numerous investigators with the SEC, the FBI and the U.S. Attorney's office worked on the case tirelessly for months, compiling a growing body of evidence that led them to Chris Collins, his son, the Zarsky family and their friends.

"(They) developed a thorough and compelling evidentiary record," Peikin said. "That record, which is summarized in the complaints, consists of e-mails and text messages, cell phone records, trading data, communications, including recorded calls with brokerage firms, IP log-on information and other (information). It reflects frantic efforts by tippers to convey inside information and traders to sell their shares before the company's negative news announcement."

Attorneys for Chris Collins tried to make the case Wednesday that Collins is not guilty of insider trading because he did not sell any of his own stock in the company. During his time on the dais at Embassy Suites on Wednesday evening, talking in front of about 30 reporters, Collins echoed the sentiment.

"When it became clear that the drug I and others believed in fell short of our hopes and expectations, I held on to my shares rather than sell them as a result," Collins said.

It's not part of the allegation against Collins that he engaged insider trading by selling stock, however. The allegation is that he initiated a tip tree that caused others to sell based on information he was duty-bound to keep confidential.

"Congressman Collins had an obligation and a legal duty to keep that information secret until that information was released by the company to the public," Berman said. "But he didn't keep it secret. Instead, as alleged, he decided to commit a crime. He placed his family and friends above the public good. Congressman Collins was a major investor in Innate and so was his son, Cameron. The congressman knew he couldn't sell his own shares for personal and technical reasons, including that he was already under investigation regarding Innate by the Congressional Ethics Office."

At the time Chris Collins was informed by the Innate CEO via an email that the clinical trials had failed, all of the stock held by Collins was tied up in an Australian brokerage. In May of 2017, Collins attempted to transfer his stock holdings to a U.S. brokerage, according to the civil complaint, but a mistake in the form delayed the transfer. Cameron Collins completed his own transfer between countries in early June. Once Innate knew it would be making a material announcement about the company, under Australian securities rules, trading of the stock was suspended. That rule didn't apply to the stock held by Cameron Collins once it was transferred to a U.S. brokerage or the other alleged members of the tip tree, so they were able to offer their stocks for sale as a penny stock on the over-the-counter Pink market under the ticker symbol INNMF.

The SEC takes a dim view of insider trading because trust is an important component of an open securities market. When traders buy or sell stock in a company based on information not available to the general public, it violates that trust.

"Insider trading is not just illegal," Peikin said. "It is also corrosive. It threatens investor confidence in the fairness and integrity of our markets. For our capital markets to retain their place as the envy of the world, the SEC and its law enforcement colleagues must be vigilant in policing against this misconduct."

Joshua Dent, president of Dent Wealth Management in Batavia, said that is exactly the attitude he expects from the SEC and it's critical to how he and his colleagues do their jobs. They need to know the securities they recommend to investors are being traded honestly and fairly.

"Stocks are traded on information and it's critical for that information to be accurate," Dent said. "Companies can get in trouble for falsifying that information to investors. At the same time, access to that information must be open to all investors or it gives some individuals an unfair advantage. Anything that causes investors to mistrust the fairness of the market is dangerous and threatens the integrity of the entire stock market."

While anybody who bought Innate stock at the time Cameron and others were selling may have lost money on the trade, it's impossible to say that they lost money because the alleged insiders were selling. The buyers were all willing buyers, Dent explained. They probably would have been looking to purchase stock in Innate even if the alleged insiders hadn't been trading. If they bought at the share price available -- about 45 cents at the time -- they would have lost their shirts by June 27 regardless of who was selling the stock. They traded on the information available to the general public and likely would have made those trades even without the alleged insiders trading. 

"There's no recourse for them because they could have bought the stock from anybody and they were willing to buy at that price," Dent said. "It's not necessarily about the victims as much as the unfairness that the Collins's were able to avoid losses and threaten the credibility of the market. The victims are basically all investors because if some people are able to receive and act on insider information and others cannot, then, as I said, it threatens the credibility of the stock market. The credibility of the stock market is based on the ability of investors to trust a fair exchange."

Chris Collins, Cameron Collins, and Stephen Zarsky each face 13 counts of securities fraud, wire fraud, and making false statements. If convicted, they each could be looking at five years in prison.

As a result of his arrest in Manhatten this morning, Collins is already facing consequences in the House of Representatives. Speaker Paul Ryan removed Collins from the House Energy and Commerce Committee.

“While his guilt or innocence is a question for the courts to settle, the allegations against Rep. Collins demand a prompt and thorough investigation by the House Ethics Committee," Ryan said. "Insider trading is a clear violation of the public trust. Until this matter is settled, Rep. Collins will no longer be serving on the House Energy and Commerce Committee.”

During today's press conference in New York City, Co-director of the SEC Avakian addressed those tempted by insider trading.

"Here's a better inside tip for those who think they can play by a different set of rules: Access to this kind of information carries with it significant responsibility, especially for those in society who hold a position of trust, to act honorably and in accordance with the law, and do not lie to special agents of the FBI," she said.

Video: Chris Collins "press conference" in Buffalo on Wednesday evening:

CBS News carried the press conference about the charges against Collins live. In the video below, the press conference starts at about the 6:45 mark.

CBS News also obtained exclusive video taken at the White House on June 22 during the Congressional picnic. It shows Collins on the phone at 7:17. The email informing board members of the failed clinical trials went out at 6:55 p.m. Collins allegedly tried multiple times to get in touch with Cameron Collins and when finally did, they allegedly spoke to each other for about six minutes.

CORRECTION: Earlier we referred to the document used in this story as a "criminal complaint." The document in the possession of The Batavian at the time this story was written was actually from the SEC and is a civil complaint. There is also a federal indictment that The Batavian had not yet obtained when this story was written.

Press release:

Larry Piegza, Reform Party candidate for the NY-27 Congressional District, had this to say about today's news that his opponent Chris Collins was arrested. 

"Over the past year, I've been sounding the alarm that Chris Collins has broken the law. Rather than risk getting a Democrat elected, I knew we needed to get another conservative, Pro-2nd Amendment, pro-business entrepreneur on the ballot. Collins's arrest today confirms what I knew all along about Chris Collins.

"The great news is, the voters in NY 27 still have a conservative option on the ballot this November. If elected, I plan to protect gun rights and balance the budget. I will put our farms and small businesses first. I will caucus with Republicans – traditional fiscal conservatives.”

An entrepreneur who has lived in Western New York his entire life, Piegza is the owner of Gap Technologies Inc., a company that develops software for colleges and universities. Gap is also developing a new product, eDemocracy.us, a virtual town hall platform for congressional representatives.

Over the last 15 years, Piegza has raised his business from the ground up with no debt and steady growth.

"Many people are asking if I still plan on donating my congressional salary to charity if I get elected, and my answer is still 'Yes!' I'm not running for office for the money. I am running because I want to work hard for the community I've lived in for my entire life. Everyone knows we need to drain the swamp – not just as a catchy campaign slogan – but we really need to do it. And we aren't going to be able to do it if we don't get qualified candidates in office."

In the past, the Reform Party has always endorsed Chris Collins. They broke from that this year when allegations against the congressman were revealed.

"The Reform Party has long believed in reforming the political and electoral process, eliminating corruption and special interest control of governmental policies, and returning more power to the people, " said Charlie Flynn, head of the Reform selection committee.

"The Reform Party advocates for term limits for congressman and judges, instant run off voting, and mechanisms for a more direct democracy. The partisan fighting in Congress this year has disgusted many people. People want a balanced budget, not a circus show."

Piegza also endorsed by Unite America, a group that advocates for a three party system.

For information on Piegza giving up his congressional salary, please see:

https://edemocracy.us/disclosures
 
Campaign Website:
http://FixItLarry.org
 
The Reform Party Website:
https://www.nyreformparty.com/
 
Unite America's Website:
https://www.uniteamerica.org

 

Here is a summary of the civil complaint against Rep. Chris Collins and his co-defendants on charges of insider trading. Indented paragraphs are direct quotes from the document. Paragraphs that are not indented are summaries, sometimes containing direct quotes. To read the full complaint, click here (pdf)

On Thursday, June 22, 2017, Christopher Collins, then a member of the board of directors of Innate Immunotherapeutics, Ltd. (“Innate”) and a U.S. Congressman representing the 27th Congressional District of New York, learned material, nonpublic information about clinical trial results for a drug being developed by Innate. That evening, Innate’s CEO emailed Christopher Collins and other members of Innate’s board to report “extremely bad news” that the trial results “pretty clearly indicate[d] ‘clinical failure.’ ” 

Christopher Collins responded to the email and then approximately 15 seconds later began attempting to reach his son, Cameron Collins. After exchanging several missed calls, Christopher Collins and Cameron Collins connected and spoke for six minutes. Over the next two trading days, between the opening of the market on Friday, June 23, and the close of the market on Monday, June 26, and while the clinical trial results were still nonpublic, Cameron Collins sold a total of nearly 1.4 million Innate shares based on material, nonpublic information he received from Christopher Collins. Cameron and Christopher Collins spoke by telephone at least nine times during that same time period. 

Camaron Collins then allegedly spoke with four individuals, including Stephen Zarsky, who allegedly called two other individuals.

Allegedly, within minutes of hearing from Camaron Collins and his girlfriend, his girlfriend's mother sold her shares of Innate.

Both Camaron Collins and Stephen Zarsky allegedly placed orders the next morning to sell Innate shares.

Later that day, Stephen Zarksy's brother allegedly placed an order to sell his shares of Innate.

Finally, on the morning of Monday, June 26, Cameron Collins tipped a friend who had previously bought Innate shares on his recommendation. Five minutes later, Cameron Collins’s friend placed an order to sell all of his Innate shares. 

On the evening of Monday, June 26, 2017, Innate announced the negative results of the drug trial to the public. On the next trading day, Innate’s share price plummeted over 90 percent to $0.0351 from the previous day’s close of $0.45.

In the four days prior to the June 26 announcement, the alleged co-conspirators sold 1.78 million Innate shares. Additionally, Zarsky's contacts allegedly sold another 25,000 shares.

Collectively, the group allegedly avoided losses of $768,600.

As of June 22, 2017, his son Cameron Collins owned over 5.2 million shares of Innate, most of which Christopher Collins had purchased for him.

In early June 2017, Innate informed its board of directors that they would not be​ permitted to trade Innate securities between June 5 and July 11, 2017, because results of the clinical trial would be released imminently. This blackout period was later modified to allow board members and other insiders to trade 24 hours after the trial results were announced publicly.

Based on seemingly positive news related to the drug Innate was developing in the spring of 2017, "On June 15, 2017, Cameron Collins opened a new brokerage account and used funds from his 401(K) account to purchase 16,508 additional shares."

Likewise, five days later, Cameron Collins’s girlfriend invested in Innate for the first time on June 20, 2017, buying 40,464 shares in a brokerage account that she had opened the previous day. 

The indictment quotes text messages from the mother of Camaron Collins girlfriend that indicate Chris Collins was providing information about Innate to her and her husband in the fall of 2016.

On September 9, 2016, Cameron Collins’s girlfriend’s father, Stephen Zarsky, purchased 200,000 shares of Innate. Her mother purchased 50,000 shares the next business day. Stephen Zarsky made additional subsequent purchases. He and his wife purchased a total of 353,005 shares of Innate prior to the relevant trading. 

At approximately 6:55 p.m ET, Innate’s CEO emailed the board of directors, stating that he had “extremely bad news to​ report” and that the results “pretty clearly indicate ‘clinical failure.’ ” He also reported that the consultants “cut and diced the data multiple times/ways to see if there were some meaningful positives, [but] could not find any.” This information was material and nonpublic.

Christopher Collins received the CEO’s email while attending an official event on the South Lawn of the White House. At approximately 7:10 p.m. ET, while still at the event, Christopher Collins responded to the email, “Wow. Makes no sense. How are these results even possible???”

At that point, Chris Collins tried repeatedly to contact his son. The indictment then goes on for several paragraphs detailing the activities mentioned above regarding communications and trading of the stock by the alleged conspirators.

Unlike the other tippees, because of his large position in Innate, Cameron Collins could not sell all of his Innate shares at once without potentially causing a negative impact on the share price. Throughout Friday, June 23 and Monday, June 26, 2017, the two trading days before Innate publicly announced the bad results of the MIS416 clinical trial, Cameron Collins entered at least 58 orders to sell blocks of Innate shares he owned. His trading pattern is consistent with an effort to sell shares quickly while minimizing impact on the share price.

During that trading period, Cameron Collins and Chris Collins allegedly spoke multiple times. Cameron Collins allegedly placed multiple sell orders, sometimes attempting to set a limit price (the sell order won't go through unless the buyer is willing to pay that price or higher) when the limit orders didn't sell, he would place a sell order at "any price," according to the indictment.

The sales by Cameron Collins, his girlfriend, and her parents, including Stephen Zarsky, made up more than 53 percent of the stock’s trading volume that day and exceeded Innate’s 15-day average trading volume by more than 1,454 percent. Innate shares closed at $0.54 per share on June 23, an increase of $0.02 over the prior day’s close.

The next day, Cameron Collins allegedly attempted to place 36 sell orders. In 33 cases, there were willing buyers. He moved 775,000 shares of Innate stock.

In May, shares of Innate owned by Christopher Collins and Cameron Collins were held in an Australian brokerage. Chris Collins initiated the paperwork to transfer the shares to a U.S. brokerage, including opening an account in his daughter's name. The transfer was completed for Cameron Collins on June 9. However, there were apparently errors in the forms for Chris Collins and his daughter. "Thus, at the time that Christopher Collins learned the results of the MIS416 clinical trial on June 22, neither he nor his daughter was able to sell Innate shares in the U.S."

After news reached a reporter June 26 of the failed clinical trial, the reporter called a Collins staff member. Chris Collins then called his son. His son then executed a trade in Australia to sell all of his remaining Australian shares, a total of 3,825,000.

On June 29, 2017, the local newspaper published an article entitled, “Collins’ office says family, chief of staff held onto stock as it sank.” The article contained a statement issued by Christopher Collins’s office worded to dispel any suspicion of insider trading by the Collins family: “Neither Chris Collins [nor his daughter] . . . have sold shares prior, during, or after Innate’s recent stock halt . . . Cameron Collins has liquidated all of his shares after the stock halt was lifted, suffering a substantial financial loss.” 

The statement by Christopher Collins’s office omitted the fact that Cameron Collins sold almost 1.4 million Innate shares on the OTC Pink market during Innate’s ASX trading halt, prior to the public announcement of the bad drug trial results, avoiding losses of approximately $570,900. Similarly, it did not disclose that Christopher Collins and his daughter could not sell their Innate shares at that time because their efforts to transfer them to a U.S. brokerage account prior to the announcement of the results of the MIS416 clinical trial had failed. 

A portion of the relief sought by prosecutors includes:

Ordering Defendants to disgorge, with prejudgment interest, all illicit trading profits, avoided losses, or other ill-gotten gains received by any person or entity as a result of the actions alleged herein;

Ordering that Defendant Christopher Collins be prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)];

CORRECTION: Earlier we referred to the document used in this story as a "criminal complaint." The document in possession of The Batavian at the time this story was written was actually from the Security and Exchange Commission and is a civil complaint.  There is also a federal indictment that The Batavian had not yet obtained when this story was written.

Press release:

Democrat Nate McMurray today said that the arrest of Republican Congressman Chris Collins on insider trading charges underscores the reasons he’s challenging Collins in 27th Congressional District.

“This is why I got in this race because I understand that the man who claims to represent this community doesn’t actually represent it,” McMurray said. “Chris Collins has openly admitted that he serves only wealthy donors and that his proudest accomplishment is making millions for his friends here in Western New York and in Washington. That’s not what Congress is for and not what our democracy is about.

“Today’s allegations by the U.S. attorney were shocking and sad, but not surprising – this has been unfolding, piece by piece, for many months. Anyone who’s been paying attention knows what’s going on. And now the jig is up because no matter how this is spun, it’s clear that the swamp is alive and well in Washington, D.C.”

McMurray said that in his frequent travels across the 27th, people from all across the political spectrum are united in their common needs for health care, better wages, and opportunities for their children.

“What will I use the people’s House for? The work of the people, period,” McMurray said. “I don’t want anyone choosing between their healthcare and their house payments, or worrying about losing their Social Security, or being burdened with trillions of dollars in new debt because of tax cuts for those who don’t need them.

“The American Dream needs to live again, and we need a representative worthy of this district and the people who call it home.”

McMurray said his personal background growing up in a family of seven children supported by a single mother has made him acutely aware of the daily challenges hard-working families face.

“I’ve also learned that regardless of our many different beliefs and political backgrounds that we are all brothers and sisters, and that we have to unite in order to secure a better future for our community and our nation. That will be my sole goal when I reach the House of Representatives in January.”

This investigation must go forward and all those involved must be held accountable so that we can restore integrity and trust to public life.

Rep. Chris Collins is facing federal charges related to alleged insider trading, according to a breaking news report from CNBC.

The report says Collins has been arrested on the charges and his co-defendants include his son Cameron Collins, and the father of his fiancee, Stephen Zarsky.

The defendants are accused of securities fraud, wire fraud, conspiracy, and making false statements, all related to publicly traded stocks of an Australian biotechnology company, Innate Immunotherapeutics. 

Collins is on the board of directors for the company.

According to the CNBC report, the indictment accuses Collins of passing nonpublic information about the company's drug trials to his son to help him "make timely trades in Innate stock" and that his son allegedly passed information to Zarsky who is accused of passing that information to unnamed co-conspirators.

Collins reportedly surrendered to federal agents in Manhattan this morning and was taken into custody. He is scheduled to appear in Federal court later today.

UPDATE 10:30 a.m.: Attorneys for Collins issued the following statement:

"We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name. 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.

Congressman Collins will have more to say on this issue later today."

Photo: File photo.

When Kathy Hochul campaigned for reelection in 2012 to the NY-27 congressional seat, which she eventually lost to Chris Collins, Hochul sought and obtained the support of the National Rifle Association.

The NRA PAC donated $7,000 to Hochul's campaign and only $1,000 to Collins.

Times have changed. In 2018, Hochul, now lieutenant governor in New York, seems to be rooting for the NRA's demise.

On Friday, using her personal Twitter account, Hochul retweeted a statement by Gov. Andrew Cuomo, who was also using his personal account, celebrating New York's apparent success in driving the NRA to the brink of financial ruin. Hochul's response? "good riddance!"

Asked about the tweet, Hochul released this statement:

“The NRA actively worked against my last campaign in 2014, because I’ve been a consistent supporter of common sense gun laws, including Governor Cuomo’s SAFE Act, some of the toughest gun laws in the nation. Simply put, the NRA’s extremist and unlawful actions are promoting violence and threatening the lives of people in New York and across the country. The Governor and I continue to fight for common sense gun safety measures to prevent violence and save lives.”

Campaigning in Genesee County in 2012, Hochul told SCOPE members, "When a bill comes up that affects your Second Amendment rights, I’m on your side."

Shortly after the meeting, Hochul, based on a year in Congress, received an A rating from the NRA.

"Some of you may say I have a 'D' after my name and I can't vote for you," Hochul said that night during the meeting at Calvary Baptist Church on Galloway Road in the Town of Batavia. "Well, fine, but I still represent you. I am independent and I look at each and every issue as what's best for the people of Western New York. Sometimes the Democrats are right and sometimes they're really wrong. Sometimes the Republicans are right and sometimes they are really wrong."

After receiving Hochul's statement, The Batavian emailed her staff and asked for clarification since her statement referenced the 2014 campaign and she was endorsed by the NRA in the 2012 campaign.

A spokesman called The Batavian and said he wasn't authorized to speak for Hochul for attribution but stressed Hochul still supports Second Amendment rights but that her views of the NRA have changed. He said it wouldn't be appropriate for him to try to speak for her to explain why. She wasn't available for further comment.

A lot has changed in the world of gun politics since 2012. In December of that year, 20 children were killed at Sandy Hook Elementary School in Newtown, Conn. There have been several other mass shootings, including in San Bernardino, Orlando, Las Vegas, and Parkland in the years since.  The nation is perhaps more deeply divided over gun laws than ever before.

Since then, the NRA has opposed banning bump stocks, raising the age on gun purchases, and has sent mixed signals about its position on so-called "red flag" laws, while NRA members and representatives have belittled survivors of Parkland, threatened other gun control supporters, and even advocated violence against journalists.

Bill Fox, president of Genesee County SCOPE, remembers the night Hochul spoke to local gun owners. She was passionate about her advocacy for gun rights. Now, he says, "she's not a friend of the Second Amendment."

Where Hochul called for "common sense" gun laws, Fox said he doesn't even know what that means.

"What is common sense?" Fox said. "There are thousands of gun control laws on the books already. What does common sense mean? If you're a criminal, you're still going to get a gun."

Fox said he's also a proud NRA member and he's disappointed in Hochul's support of the SAFE Act.

"She stood there and told us how her family hunts and how she supports gun rights and now she supports the SAFE Act," Fox said.

Fox thinks Cuomo's true aim isn't gun control but gun removal.

The financial difficulties faced by the NRA stem from efforts by New York to stop the NRA from selling insurance to conceal carry permit holders called "Carry Guard." 

New York officials contend the insurance is illegal because it provides financial assistance to people who engaged in "intentional wrongdoing." 

The bottom tier insurance plan provides $250,000 in civil liability coverage to a person who discharges a firearm and $50,000 for criminal defense, but according to the NRA website, the policy will only pay out a defense claim if the policyholder is acquitted. There is no coverage if a person fires a gun, is arrested, and is convicted of a crime.

Some gun control advocates support requiring mandatory insurance policies for gun owners.

New York's efforts to stymie the insurance program seem to have far-ranging effects, causing financial difficulties for the NRA with insurance carriers and financial institutions. The NRA has warned in a lawsuit filed against New York that it is facing insolvency because of the state's regulatory actions.

Hochul is engaged in a tough primary campaign to retain her lieutenant governor post against a Downstate progressive challenger Jumaane Williams. Hochul has a slim lead, according to a recent poll.

Press release:

Congressman Chris Collins (NY-27) applauded the Trump Administration for providing about $11 billion in aid to farmers impacted by recently imposed tariffs, with a focus on providing aid to the dairy sector in particular.

Collins represents one of the nation’s largest dairy producing districts and has been an outspoken advocate for policies that strengthen the industry.

“By imposing tariffs on nations like China, President Trump is working to level the playing field between the United States and other countries that have taken advantage of us for far too long,” Collins said. “From the start, we were assured that the administration would take appropriate action to protect industries, like our nation’s agriculture industry, that may be impacted by the tariffs.

"Today’s announcement is a win for the dairy industry as President Trump continues to put American interests first and fight for fair trade deals.”

Unjustified retaliatory tariffs have disproportionately targeted American farmers, impacting prices and raising costs. The emergency aid will come from already authorized money from three separate programs that are administered by the United States Department of Agriculture’s (USDA) Farm Service Agency. The USDA has broad authority to stabilize the agriculture economy during financially difficult times by purchasing excess supply.

Collins added: “As we work toward better deals that reduce our trade deficit, I support implementing policies that provide hardworking farmers with temporary assistance during this adjustment period. President Trump is a strong negotiator, and I have complete confidence in his abilities to grow our nation’s agriculture exports through competitive, long-term deals.”

Here's a related press release from the New York Farm Bureau:

The following statement can be attributed to NYFB President David Fisher:

“The USDA’s $12 billion plan to support farmers caught up by the retaliatory tariffs slapped on U.S. agricultural products recognizes the dire need for some relief. Farmers are already facing the financial consequences of the trade barriers. Commodity prices are once again dropping at a time when farm income has been at its lowest point in years.

Secretary Perdue has followed up on his word to address the huge impact that this has had on farmers, which is reflected in the size of the relief program. However, in the end, what our farmers are asking for are open markets to sell the quality products they produce. We hope that the trade matter will quickly be resolved because short-term relief can only go so far when farmers need to plan for the long term.”

Congressional challenger Nate McMurray made a series of campaign stops in the NY-27 yesterday, including in Batavia at the Genesee County Fair, to call out Rep. Chris Collins for not calling out President Donald Trump over, what McMurray said, was Trump's false equivalency between the United States and authoritarian-ruled Russia.

Collins has stood by Trump following Trump's press conference with Vladimir Putin in Helsinki, which followed a private meeting between the two leaders, where Trump seemingly dismissed U.S. intelligence reports of Russian interference in the 2016 election.

"I’m disappointed our congressman didn’t come out boldly — I don’t care, if Donald Trump were a Democrat, I don’t care who he is — when someone gets up on a stage and compares America to an authoritarian state you have to stand up and say that is wrong," McMurray said. "As a kid growing up in this country and believing in the future of our country, I am saying that is wrong."

In the midst of bipartisan criticism of Trump's remarks, Collins issued the following statement:

“I share President Trump’s continued frustration as the left continues to try to nullify the 2016 Presidential election with claims of Russian interference. The fact is, any Russian meddling did not make a difference in the election and there was no campaign collusion. It’s time the Mueller investigation comes to a conclusion. I also urge the President to work with Congress to ensure any future Russian attempts to influence our elections are stopped at our border. Unfortunately, this is something the Obama administration failed to do."

McMurray said in the 48 hours after the press conference, his campaign was re-energized by new supporters and new volunteers signing up.

"Republicans, Democrats, and independents alike are getting involved in our campaign and they’re getting involved because they’re worried about the state of our country," McMurray said.

About 24 hours after the press conference, Trump said he misspoke in Helsinki.

"I thought that I made myself very clear, but having just reviewed the transcript ... I realized that there is a need for some clarification," Trump said. "The sentence should have been ... 'I don't see any reason why it wouldn't be Russia.' "

He said he meant to say "wouldn't" instead of "would."

McMurray thinks Collins has a job to do and he's not doing it: Being a check on executive power.

"A big part of being a congressman is you must be a check on the executive branch, even if you love Donald Trump," McMurray said. "We do not live in an authoritarian state like Putin has. We live in a country where people who go to Congress, people who fight for the people of Western New York, need to be a check on the executive branch so we don’t have an expansion of unwarranted power."

The Batavian contacted the Collins campaign and requested a response. Spokesman Bryan Piligra sent over the following quote:

“Residents of Genesee County know Chris puts their interests first in Washington, fighting for our farms, veterans, and small businesses. They also know he proudly supports President Trump and he won’t back down from that support because radical progressives can’t get over the 2016 election."

Press release:

Congressman Chris Collins (NY-27) today introduced legislation that prevents states from diverting fees collected from consumers on their phone bills, which are meant to be used to improve 9-1-1 emergency communications systems.

The Federal Communications Commission (FCC) has found that New York diverts at least 41 percent of 9-1-1 fees that are collected for other non-public safety-related purposes. Congresswoman Anna Eshoo (CA-18) and Congressman Leonard Lance (NJ-07), vice chair of the Communications and Technology Subcommittee, co-authored the bill and have also seen 9-1-1 fee diversion in their home states.

“It is completely unacceptable that we have seen states diverting fees meant to make important and necessary improvements to emergency response systems,” Collins said. “Diverting these important fees puts lives in danger, especially in rural areas. I thank Congresswoman Eshoo and Congressman Lance for their support of this legislation and their commitment to making sure all communities across the nation can achieve the highest level of safety.”  

“Our 9-1-1 call centers are the first point of contact for Americans in emergency situations, but many of these call centers rely on technology that’s been in place since the time of the first 9-1-1 call 50 years ago,” Eshoo said.“9-1-1 fees collected by states should only be used to upgrade our 9-1-1 infrastructure, not diverted to the general coffers of state governments.”

“My constituents need to know that in an emergency the 9-1-1 call is going to go through,” Lance said. “Lawmakers in Trenton raided the fund set aside to improve the 9-1-1 system and left the account penniless – leaving public safety threatened and taxpayers on the hook. Members of the Communications and Technology Subcommittee are seeking to end this practice.

"The 911 Fee Integrity Act will empower the Federal Communications Commission to crack down on state governments that divert these funds and shortchange much-needed upgrades to bring the critical 9-1-1 system into the 21st century. And instead of further taxing New Jerseyans, Trenton should first stop diverting the existing fees from their intended use.”   

Collins’ bill directs the FCC, in consultation with public safety organizations, and state, local and tribal governments, to determine the appropriate use of funds collected from consumers. Currently, states are able to set their own definition of what is a covered cost for 9-1-1 fees, which has allowed them to divert fees.

In April, Collins toured the Niagara County 9-1-1 call center with FCC Commissioner Mike O’Rielly where they called on the State of New York to stop diverting fees. Governor Cuomo has not stopped diverting fees, leading Collins to introduce the 911 Fee Integrity Act.