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Rep. Chris Collins, R-N.Y., vowed Wednesday night to continue his campaign for re-election and fight federal charges that he used his position with an Australian biotech firm to help his family make illicit stock trades — and avoid more than $768,000 in losses.
Collins, 68, who was the first member of Congress to endorse Donald Trump for president in 2016, faces insider trading charges along with his son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins' fiancée, according to the U.S. attorney's office in Manhattan. The men are also charged with lying to the FBI in interviews to cover up the alleged scheme.
The trio pleaded not guilty Wednesday afternoon in federal court in Manhattan and were awaiting release on $500,000 bail apiece.
At a news conference on Wednesday night, Collins, who is seeking re-election, said he planned to remain on the November ballot, calling the charges "meritless" and promising to "mount a vigorous defense in court to clear my name."
"I believe I acted properly and within the laws at all times," he said, adding: "Throughout my tenure in Congress, I have followed all rules and ethical guidelines."
Earlier in the day, prosecutors walked through their case, which involves Innate Immunotherapeutics, a small North Melbourne-based pharmaceutical company.
Collins "placed his family and friends above the public good," said Geoffrey Berman, the U.S. attorney for the Southern District of New York.
Collins served on Innate's board for three years until 2017 and remains one of its biggest shareholders. He owns nearly 17 percent of the stock, which is traded on the Australian Securities Exchange and in the United States on the over-the-counter market.
According to a grand jury indictment, Collins in June 2017 passed along material that was nonpublic regarding the results of a drug trial — meant to treat an advanced form of multiple sclerosis — so his son "could use that information to make timely trades in Innate stock and tip others."
The drug trial failed — and Innate's stock would later tumble by 92 percent.
Collins was at a congressional picnic at the White House on June 22 when Innate's chief executive sent an email to the board of directors reporting that the trial was a bust, according to the indictment.
"I have bad news to report," the email began.
Collins quickly replied: "Wow. Makes no sense. How are these results even possible???"
Then, within six minutes came a flurry of phone calls to reach his son, who owned more than 2 percent of Innate stock, prosecutors said. He finally reached Cameron Collins, who allegedly passed the information from his father to Zarsky and other unnamed co-conspirators, who then engaged in "timely trades" of the stock.
Cameron Collins unloaded his Innate shares, as did his fiancée and Zarsky, in the days that followed. Zarsky's wife and a friend also benefited from the move, prosecutors said.
On June 26, news of the failed drug trial was made public and the stock took a nosedive. The defendants managed to avoid more than $768,000 in losses, prosecutors allege.
Collins said Wednesday night that he never sold any of his shares, losing "millions of dollars" in the process.
"I've said it before and I'll say it again: I am proud of my affiliation with Innate," he said.
In a statement, Innate said it was cooperating with requests for information by the U.S. Securities and Exchange Commission, or SEC. It said that Collins retired as a director in May and that the investigation was "a private matter to Mr. Collins."
The SEC also announced Wednesday that it has filed securities fraud charges against Collins.
The advocacy group Public Citizen asked the Office of Congressional Ethics and the SEC to investigate Collins' stock dealings in January 2017. The group said it was concerned that he had purchased millions of shares of Innate in 2016 while sponsoring legislation that could benefit the firm.
Last fall, members of the House Ethics Committee announced that they would review Collins' activities.
House Speaker Paul Ryan, R-Wis., said in a statement Wednesday that the committee must move forward with a "prompt and thorough" investigation.
"Insider trading is a clear violation of the public trust," Ryan said, adding that Collins would be removed from his seat on the Energy and Commerce Committee for the time being.
At his hearing Wednesday, Collins was ordered to surrender his diplomatic passport and firearms within 14 days. His next court date was scheduled for Oct. 11.
He, his son and Zarsky face as long as 20 years in prison if convicted of a single count of securities fraud.
Attorneys for Collins said in a statement that they will "mount a vigorous defense to clear his good name."
They added that prosecutors didn't allege in the indictment that Collins personally traded Innate stock, saying: "We are confident he will be completely vindicated and exonerated."
Innate executives in Australia couldn't immediately be reached for comment.
He represents New York's 27th Congressional District, which includes suburbs of Buffalo and Rochester, and is up for re-election in November. He has raised more than $1.34 million for his campaign, according to the latest Federal Election Commission filing.
Political analysts have considered his Democratic opponent's bid a long shot, The Niagara Gazette reported last month.