WASHINGTON – Not many 24-year-olds have big money invested in an obscure Australian biotech firm, but Cameron Collins – son of former Rep. Chris Collins – did.
And on the afternoon before sentencing the younger Collins on a felony insider trading charge, the judge asked prosecutors and defense lawyers whether Cameron's shares of Innate Immunotherapeutics stock were really products of his wealth – or his father's.
"Cameron Collins owned approximately 2.3% of the shares in Innate," the judge wrote in an order late Wednesday that included other questions that appeared to be sympathetic to the younger Collins. "Whose money was used to purchase these shares?"
Earlier court documents indicated that the elder Collins started buying Innate stock for his son when the boy was 12, but they do not make clear whether all of Cameron Collins' Innate shares came via his father. That being the case, the judge asked for more details.
"When was the first purchase of Innate shares by Cameron Collins and/or by someone on his behalf?" he asked. "Did Christopher Collins purchase some of the shares for Cameron Collins and/or Caitlin Collins using his money? If so, how many shares were purchased by Christopher Collins?"
U.S. District Court Judge Vernon S. Broderick also seemed intent on finding out whether Chris Collins ordered his son to dump his Innate shares in June 2017 based on the secret news that the company's only product, a multiple sclerosis drug, had failed in clinical trials.
"Can either party provide additional details concerning what was discussed during the six-minute call on June 22 between Christopher Collins and Cameron Collins?" the judge asked.
Then, noting that Collins and his son spoke several other times over the next few days as Cameron Collins dumped his Innate shares, Broderick asked for details on those conversations, too.
Prosecutors have asked to sentence Cameron Collins to 36 to 47 months in prison for conspiracy to commit securities fraud.
That's what federal sentencing guidelines call for, but the judge asked other questions that seemed to indicate that he was leaning against hitting the younger Collins, now 27, with such a stiff sentence.
"Can either party identify any insider trading case where an individual who was 24 years old at the time of the offense was sentenced within the guidelines range for insider trading?" Broderick asked.
Similarly, Broderick asked prosecutors and defense lawyers whether other cases of young inside traders were handled as civil matters before the Securities and Exchange Commission rather than as criminal offenses.
Broderick last week sentenced the elder Collins, who had been a four-term Republican congressman from Clarence, to 26 months in prison for his role in the Innate insider trading scheme.
Chris Collins – an Innate board member at the time – did not dump any of his shares upon learning that the company's only product had failed. But he admitted in court that he shared that information with his son and they discussed Cameron dumping his shares.
By doing so, Cameron Collins saved himself $571,000.
The younger Collins then shared that inside bad news with his girlfriend, Lauren Zarsky, and her parents, Stephen and Dorothy Zarsky. The Zarskys dumped their Innate shares. And while the SEC hit all three with civil charges that have since been settled, federal prosecutors also indicted Stephen Zarsky.
Cameron Collins will be sentenced Thursday afternoon and Zarsky will be sentenced a day later. All three men in the case pleaded guilty in October.
Also on Wednesday, prosecutors in the case asked the judge to sentence Zarsky to "a substantial term of incarceration," although not as long as the term given the former congressman. Zarsky saved himself approximately $143,900 by dumping his Innate stock.
"Zarsky exploited inside information for his own pecuniary benefit and for the benefit of his friends and relatives," prosecutors said in a sentencing memo to the judge.
Prosecutors noted that Zarsky, like Chris and Cameron Collins, lied to the FBI about dumping his Innate stock. In addition, the prosecutors' letter disputes Zarsky's claim that he "could not afford" the losses he tried to avoid through insider trading. Prosecutors also disputed the Zarsky team's contention that he is too ill to be sent to prison.