Republican Rep. Chris Collins (NY) rejected a plea deal offered by federal prosecutors prior to his indictment on felony charges of insider trading earlier this month, but legal experts believe he might still plead guilty in an effort to protect his son, who is also charged in relation to the family’s investments in a biotech firm.
Prosecutors say Collins, while at a White House picnic last June 22, got an email telling him that Innate's only product – an experimental treatment for secondary progressive multiple sclerosis – had failed in clinical trials. They allege phone records show that Collins then called his son, who started unloading his Innate stock the next day while also spreading the inside information about the failed drug trial.
Cameron Collins and his prospective father-in-law, Stephen Zarsky, also face criminal charges in the case – and they, too, may end up settling with the government before the case goes to trial, said four independent legal experts asked about the case by The Buffalo News.
Florida attorney David Chase, who previously tried insider trading cases as a senior counsel for the Securities Exchange Commission’s enforcement division, and Paul Cambria, a Buffalo defense attorney, said Collins will likely plead guilty at some point to spare his son a worse outcome.
"In a case like this, prosecutors usually play the family card," Cambria said. "The father would plead guilty in order to get concessions for the son. I would be shocked if that weren't part of the deal."
Cambria, however, said Rep. Collins could pose a strong defense in court by essentially ignoring that family dynamic. After all, Chris Collins – Innate's largest shareholder – didn't sell any of his Innate stock, and therefore ended up losing at least $5 million when the stock crashed after the release of the clinical trial results.
"Chris Collins can say: 'Hey, I told my son about those test results, but I didn't tell him to sell the stock'," Cambria said.
If the cases go to trial, Collins’ son faces the possibility of paying up to $1.2 million in fines:
If the case goes to trial and the defendants lose, the SEC can seek civil damages of up to three times the amount of the illicit gains, Chase said.
Given that prosecutors say Cameron Collins saved himself about $570,000 by selling his Innate stock, he would have to pay that money back as part of any settlement and probably pay a $570,000 fine as well. But if Collins and his son fight the criminal case at trial and lose, the SEC wouldn't have to go to trial on the civil charges, Chase said.
The attorneys for all three men declined to comment on the issue of plea deals, but a spokesman for Rep. Collins' lawyers, said:
"The legal team won’t comment on this beyond restating what they and Mr. Collins have said previously. Congressman Collins intends to fight these charges in court and ultimately be vindicated."
Similarly, one of Cameron Collins' lawyers, Rebecca Monck Ricigliano, said: "We intend to mount a vigorous defense on behalf of our client, Cameron Collins. We look forward to addressing these charges in court, and will not be commenting on this case outside of the courtroom."
A lawyer for Zarsky, Amanda Bassen, offered no comment on the case or the prospect of a plea deal.