Rep. Chris Collins and his staff spun out a number of statements about Innate Immunotherapeutics as news outlets, including The Buffalo News, dug into the congressman's involvement with the company and his efforts to talk up the stock on Capitol Hill.
Many of the statements look like they were falsehoods now that the Securities and Exchange Commission and federal prosecutors in New York City have charged the congressman, his son and the son's future father-in-law in an insider trading scheme and revealed details of their investigations. Some of the statements also were exposed as untrue when the Office of Congressional Ethics revealed the results of its investigation in October 2017.
Prosecutors allege that Collins, who was an Innate director and its largest shareholder, passed along secret information that let the small circle of investors connected to his son Cameron sell more than 1 million shares before the stock price tanked in June 2017.
Here are some of the statements raising questions, now that more is known:
1. "Cameron Collins has liquidated all his shares after the stock halt was lifted, suffering a substantial financial loss."
Prosecutors say this statement from a Collins aide, Sarah Minkel, was deliberately misleading. They say that Collins' son Cameron unloaded 1.4 million shares early because his father told him the company's only real product, a drug to deal with secondary progressive multiple sclerosis, had failed a trial. The price fell 92 percent after the news was officially announced on the evening of June 26, 2017, in the United States. But by then Cameron Collins had sold about a quarter of his shares, avoiding a loss of almost $571,000, the government says. Days later, after the news was made public, Cameron Collins sold his remaining 3.8 million shares at a substantial loss, prosecutors say.
When asked to comment for this article, an aide to Collins referred the matter to lawyers defending the Republican from Clarence in the federal case. The legal team declined to comment.
2. Trading in Innate's stock spiked in America last Friday (June 23, 2017) because investors saw that a major company announcement was coming, not because someone tipped them off to sell.
A source in the Collins camp, who asked not to be identified at the time, offered this explanation for the spike in trading volume on Innate stock on the day that the company said a major announcement would come on the following Monday.
The SEC, however, said mass selling by Cameron Collins, his future fiancee, Lauren Zarsky, her parents, Stephen and Dorothy Zarsky, and two others connected to the family made up more than 53 percent of the stock's trading volume on June 23. The group sold more than 1 million shares of Innate based on insider information, the SEC said, exceeding the 15-day average trading volume by 1,454 percent.
3. “Despite the continued partisan attacks insinuating otherwise, Congressman Collins has followed all ethical guidelines related to his personal finances during his time in the House and will continue to do so.”
Collins aide Michael Kracker said this in May 2017 when news broke that the Office of Congressional Ethics would probe complaints about the congressman urging potential investors to buy Innate's stock.
The Office of Congressional Ethics reported in October 2017 that it had found substantial evidence to conclude Collins broke House rules by seeking help for Innate at the National Institutes of Health in 2013.
4. “As I have said before, Congressman Collins has never disclosed any nonpublic or improper information related to Innate Immunotherapeutics.”
Former Collins spokesman Michael McAdams said this in January 2017, after The News continued to report on the congressman pitching the stock in the nation's capital.
After asking Collins about emails he had sent in late 2015 and 2016, the Office of Congressional Ethics accused Collins of “tipping” investors to inside information that could persuade them to invest more money in Innate. The congressional investigators found Collins provided investors with more details about the progress of Innate's ongoing drug trial than the company itself was making public.
5. It’s not a conflict of interest for Collins to work on legislation affecting drug companies because the Australian biotech firm he’s intimately tied to (Innate) didn’t have business before federal regulators.
Collins aides used that statement from late 2015 into the middle of 2016 to counter criticism that legislation championed by the congressman – to streamline the FDA's drug-approval process – would also benefit Innate Immunotherapeutics.
As it turned out, Collins knew that Innate was more than likely going to have business before the FDA. In a letter to investors in January 2016 – one month after the "21st Century Cures Act" passed the House – Collins said Innate's drug trials in Australia and New Zealand were following procedures meant to "satisfy FDA." An ethics investigator asked Collins on June 5, 2017, why he said that. Because, Collins responded, Innate's directors figured the company might someday be sold to a big pharmaceutical company if its drug was successful, and the federal Food and Drug Administration would become involved.
"Ultimately, whoever buys our company is going to the FDA," Collins said during his interview. "The big market's in the U.S."
There was a second reason Innate's drug would be before the FDA. Innate, the ethics investigators learned as their probe unfolded, would need the agency's approval in order to conduct trials in the United States. The company applied to the FDA to obtain "investigational new drug" status for MIS416 in May 2017 and obtained the clearance the following month, the company announced on June 21, 2017.
While the company heralded the FDA decision, the disappointing news about the trials of MIS416 in Australia and New Zealand was just days away.
6. “I never once talked about that. … I’ve never encouraged anyone to buy the stock. Ever.”
Collins in June 2017 made that comment to The Hill, a newspaper focused intensely on Congress.
But the newspaper said it interviewed a half dozen Republican lawmakers who said they heard Collins talk up Innate at official meetings and in informal settings on the Hill. Collins' own freewheeling testimony before the Office of Congressional Ethics painted a similar picture: "Who in Congress have you talked with about Innate?" Collins had said, referring to a question he had been asked as the controversy unfolded. "And I said, 'The bigger question would be, who haven’t I talked to?' " He added later: "When we're sitting on the House floor, killing time ... we talk about our kids, and we talk about our vacations and we talk about the New York Yankees (or) in my case, my companies.”