chris collins

The GOP chairs in the NY-27 will apparently meet soon now that a way has been found to remove the name of Chris Collins from the ballot in the race for the NY-27 congressional seat.

Collins dropped out of the race after being arrested Aug. 3 for alleged insider trading. He is charged with securities fraud, wire fraud, and lying to the FBI.

Dick Siebert, the Genesee County chair for the GOP, said he can't disclose any details and that he doesn't even know all of the details.

"I received a call from a source in Erie County and was led to believe that we will get Collins' name off the ballot with the opportunity to replace him with another candidate," Siebert said.

Siebert doesn't know yet when the GOP chairs will meet to discuss this latest development or pick a replacement candidate.

Both the Democrats and the Reform Party have candidates in the race. Nate McMurray, the Democrat, has issued statements blasting the Republicans for any attempt to remove Collins from the ballot and Larry Piegza has issued statements arguing he is the logical pick for the GOP chairs since he's a Trump supporter. Piegza has expressed frustration that none of the GOP chairs will even return his calls.

There are at least eight people vying for the GOP selection, including Batavia's own Steve Hawley, whom Siebert said he favors.

Whatever scheme the Republicans use to remove Collins from the ballot, the Democrats have vowed to fight it in the courts.

Press release:

Nate McMurray, the Democratic and Working Families Party candidate for New York’s 27th Congressional District, released the following statement after Congressman Chris Collins broke his silence one month after suspending his campaign when he was indicted on charges of insider trading.

“Tonight voters heard from a man who has lost the public trust. Congressman Collins played the victim, has refused to resign from Congress and tonight expressed surprise that the rules do, in fact, apply to him.

“Mr. Collins admitted that this ballot bait and switch, ‘has never been done before’ and there’s a very clear reason: it’s undemocratic, it’s wrong, it’s insulting to voters, and it’s a joke. Most importantly, it’s illegal and will not stand. Our laws exist for a reason and party bosses don’t get to change them just because their candidate was indicted.

“The truth is that Mr. Collins is willing to be a sham candidate, willing to dupe voters by running for whatever position these kingmaking ‘powers that be’ can manipulate the easiest.

 “I’ve been crisscrossing the district and talking to the voters Mr. Collins pledged to represent and the truth is that they’re angry, they feel betrayed, and they don’t want to trust the system that knew about these allegations and propped up Mr. Collins anyway.”

In other NY-27 news, the deputy chief of staff for Collins, Michael Kracker, has resigned and taken a job with Unshackle Upstate as executive director.

The House Ethics Committee has announced it will convene a special panel to investigate Rep. Chris Collins and his alleged insider trading activities as a member of Congress.

The investigation will be led by Rep. Mimi Walters, a Republican from California but will not begin until federal criminal proceedings against Collins have run their course.

Collins was arrested Aug. 3 and accused of securities fraud, wire fraud, and lying to the FBI.

The Erie County businessman is accused of calling his son, Cameron Collins, with a stock tip after receiving word, as a member of the board of Innate Innate Immunotherapeutics, that a drug under development to treat secondary multiple sclerosis had failed a key clinical trial.

After receiving the call, according to Federal documents, Cameron began selling his holdings in Innate after receiving the call but before the news of the failed trail had been released to the public, as well as calling other friends and family to share the news with them. As a result, the group of stockholders reportedly sold off more than 1.4 million shares of stock.

According to House rules, the Ethics Committee must open an investigation anytime a member of Congress is arrested. Politico reported its unusual for the committee, which is controlled by Republicans, to announce an investigation so close to mid-term elections.

The committee will also investigate Rep. Duncan Hunter, a Republican representing Eastern San Diego County, including El Cajon. Hunter is accused, like his father, who held the same seat for 21 years prior to his son, of using campaign funds for personal expenses. Collins and Hunter where the first two members of Congress to endorse Donald Trump during the GOP primaries.

Nate McMurray thinks the president should take a positive interest in his campaign for Congress.

After Donald J. Trump sent out a highly controversial tweet yesterday blasting his attorney general for prosecuting criminal cases against Rep. Chris Collins and Rep. Duncan Hunter, McMurray responded with two tweets of his own. 

Hey, @potus popular? Around here @RepChrisCollins is about as popular as Lyme Disease. You need to pick better friends, maybe someone who actually has a clue about helping working families...Call me.

The Batavian asked, via text message, for McMurray to clarify his statement, McMurray said, "Just like I said. He's picking the wrong people. The wrong policies. If the President is really interested in helping the people here, and not just talking about it, I want him to be successful."

He then added, "I can help."

Collins was arrested by federal agents a month ago on charges of securities fraud, wire fraud and lying to the FBI. The NY-27 representative is accused of disclosing to his son confidential information about Innate Immunotherapeutics Ltd. Collins served on the board of directors in 2017 and was notified in June of that year that a key clinical trial had failed. The call by Collins to Cameron Collins allegedly sparked a series of stock trades where Cameron, other family members, and associates dumped 1.4 million shares of the company's stock.

Hunter (who represents the eastern part of San Diego County, including El Cajon, filling a seat once held by his father) is accused of using campaign funds for personal expenses (a non-criminal accusation also levied in 1989 against his father). 

Contrary to Trump's claim in his tweet, neither investigation began during the Obama years. Both investigations started after Trump became president. In fact, the trigger for the investigation into Collins was Cameron's highly suspicious pattern of trades in June 2017, which led to investigators discovering the phone call made by Collins from the lawn of the Trump White House.

Two days after vowing to fight the charges and remain in the campaign for reelection at a press conference where he refused to take questions, Collins suspended his campaign. He promised to cooperate in an effort to get his name off the November ballot. So far, the eight GOP county chairs of the NY-27 haven't announced how they intend to get Collins off the ballot and there's even doubt among the chairs that it can be done.

The presidential tweet about the Collins arrest also prompted a press release from McMurray. He wrote:

“President Trump just acknowledged what we all know: what was long considered a slam-dunk election for Congressman Collins is now in doubt and the reasoning is clear – Congressman Collins spent more time worrying about making millions for his buddies than he did helping working families in Western New York,” McMurray said.

“The FBI finally confirmed what so many of us in Western New York know – that the system is corrupt. Now the same party officials that knew of Congressman Collins’ conduct want to fool voters into believing that they can pull a bait and switch to put someone new on the ballot. They want a mulligan. This isn’t democracy, this is fraud and the voters I meet as I crisscross the district won’t stand for it.

“I’m putting party politics aside to stand up for the working men and women of Western New York. I was proud to stand with many of them this Labor Day and I’ll be proud to work on their behalf in Congress.”

On Twitter, McMurray often portrays himself as fighting for the middle-class, working families of Western New York; however, where he aligns with Trump on issues is hard to say.

In a July 14 Tweet, McMurray he said:

MY PLATFORM:

—Medicare for all
—Unions
—Free, reduced tuition
—Agriculture as a nat security issue
—Green energy
—Broadband for all
—Marijuana legalization
—No more wasteful wars
—Human rights, safe immigration
—Smart trade
—Term limits
—Reproductive rights
—Fair tax laws

— Nate McMurray for Congress (@Nate_McMurray) July 14, 2018

Later in the month, he was critical of Collins' support of Trump's trade agenda, tweeting: 

TARIFFS ARE TAXES. My opponent supports them. I support smart trade, leveraging our strength to gain access to key foreign markets. We need to sell to more people. We don’t need to put up a barrier to the world and hide.

However, an email exchange with The Batavian on July 30, McMurray said Trump was 100 percent right in his assertion that the U.S. is being taken advantage of by trading partners. The Batavian had asked McMurray if he would seek the aid from the Koch Network, which is backing Democrats this cycle who support free trade. McMurray said he wouldn't, citing his agreement with the president that the world is taking advantage of the United States.

"We can’t bury our head in the sand," McMurray said. "We need to engage with the world. We just can’t do it the way we have done it, by getting taken advantage of and being willing to leverage our bargaining power."

One of the fears or Trump-supporting Republicans is that if the Democrats win control of the House in the mid-term elections, they will quickly move to impeach Donald Trump. McMurray has indicated on social media that he is not an automatic vote for impeachment.

OPEN LETTER TO NY27: CLEARING UP A FEW POINTS

"I have no intention of “voting to impeach” on my “first day in office.” My first day in office, I expect I’ll be spending most of my time unpacking and figuring out the best place to hang pictures."

READ https://t.co/JquVIvFq8Q

— Nate McMurray for Congress (@Nate_McMurray) August 27, 2018

 

McMurray has campaigned across the district since the arrest of Collins but has completely skipped over Genesee County during the past four weeks. Yesterday, he missed the Labor Daze parade in Oakfield.

Trump's Labor Day tweet has been criticized by both Republicans and Democrats as an attack on the criminal justice system and an attempt to subvert the rule of law.

Lt. Gov. Kathy Hochul, who presented Genesee County in Congress before losing her seat to Collins in 2012 joined the chorus of boos this morning.

When I ran for re-election to Congress in 2012, I warned voters that @RepChrisCollins would put his own interests ahead of the people of Western NY.

Not surprised @realDonaldTrump would defend a man who was arrested for insider trading. Two corrupt men, made for each other. https://t.co/9WQkuX8K7c

— Kathy Hochul (@KathyHochul) September 4, 2018

There has yet to be another meeting scheduled of GOP chairs in the New York 27th Congressional District and Genesee County's GOP chairman, Dick Siebert, isn't feeling overly optimistic that the chairs will find a way to get the name of Chris Collins off the November ballot.

Collins, the two-term congressman for the NY-27, suspended his campaign a month ago after being arrested by federal authorities for allegedly providing an illegal stock tip to his son, Cameron Collins.

"I’ve got of got a feeling that he’s not coming off the ballot but what do I know," Siebert said. "How it looks at this stage is, he’s on the ballot."

Siebert hasn't heard anything from the other chairs since the eight of them from the district met with potential candidates to replace Collins a week ago. 

There have apparently been attempts to find a ballot line for Collins in a more diminutive seat in a town in Erie County, but as the Clarence Bee reports, those efforts aren't being embraced by local town officials.

Siebert said he isn't surprised.

"He’s pretty toxic," Siebert said. "I’m sure some town boards wouldn’t want anything to do with this."

All of that wrangling, though, Siebert said, is for others to worry about. Collins said he will cooperate with any effort to get his name removed from the NY-27 ballot, which Siebert said he is counting on, and then it's up to the attorneys to figure out how to do it in a way that will withstand a legal challenge by Democrats. As far as Siebert's concerned, the only job of the GOP chairs is to pick a replacement for Collins if his name is removed.

"If we do anything, let's find the best candidate, at least," Siebert said. "Let's try to find the best one if the opportunity presents itself and if it doesn't, well, then, we did our best to try and be ready."

There are reportedly still eight GOP hopefuls. Siebert noted that only one remains from Genesee County, Steve Hawley.

"I've lost two candidates, (David) Bellavia and (Mike) Ranzenhofer but I've still got one candidate and I think highly of him," Siebert said. "I thought Steve and Ranzenhofer both did very well and were both very highly rated by our group."

While Ranzenhofer has withdrawn his name from consideration, Hawley told The Batavian yesterday that he's waiting for the process to play out, at least for now.

Press release:

The Democratic Committee Chairs of the eight counties that make up NY-27 conferred together last night by conference call as their GOP counterparts met and failed to concoct a way to get Chris Collins off the November ballot.

After their conversation, the Democrats of the district reaffirmed that there was no legitimate way to change candidates now. Any attempt to do so would be a fraud against the voters of this district.

"Just like Chris Collins believed that rules against insider trading did not apply to him, local Republican bosses seem to think that election law doesn't apply to them when it suddenly becomes inconvenient," said Cindy Appleton, the Democratic chair of Wyoming County. "They don't get to do a do-over months after the deadline for changing the congressional ballot has passed, even if the man they insisted on being their candidate inconveniently got arrested and faces up to 150 years in jail."

The Ontario County Democratic Committee Chair John Hurley pointed out that the GOP bosses were all in for Chris Collins until a week ago, despite the fact that Collins was already under a congressional ethics investigation because of his questionable financial dealings. They ignored pointed critiques of his conduct, such as those launched by the late Rep. Louise Slaughter (NY 25), and did everything possible to smooth the path for Collins' reelection campaign.

"There were all sorts of red flags being raised about Collins, but GOP bosses didn't care," Hurley said. "They had a choice, remember. Frank Smierciak II submitted petition signatures to run in a Republican primary, and they succeeded in getting him thrown off the primary ballot to benefit Collins. They also tried to run an obvious fake Green Party candidate to split the anti-Collins vote, a move they didn't get away with."

Hurley added, "they won't get away with this move, either. They don't just get to change the ballot that was set under the rules because it now suits them. It's blatantly clear that they only care about Chris Collins' ethical issues this week because he got caught last week."

Jeremy Zellner, the Erie County Democratic chair, said that there were good reasons that the GOP hadn't yet been able to announce any way of removing Collins from the ballot.

"They're flailing," Zellner said. "There isn't a legitimate path to do what they want to do, so they keep telling us they're going to get him taken off, but they haven't been able to tell us how yet."

Zellner went on to say that there is case law that states that candidates can't simply move out of state and get off the ballot.

"It didn't work for Tom DeLay after he was indicted in 2006, and it won't work for Chris Collins when he was indicted in 2018," Zellner said.

He also noted that the town of Clarence where Collins resides has no local offices up for election this year, so that Republican bosses would have to force a current town officeholder to retire just to create a vacancy for an accused criminal -- who would be unlikely to have any real interest in serving in that smaller office -- to run for.

"And they can't just put him up for some office somewhere else," Zellner said. "He's under multiple indictments He has no interest in these other positions. It's dishonest and disgraceful."

Judith Hunter, the Livingston County chair, declared, "Nate McMurray played by the rules and will be our candidate in November. The Republicans are trying all kinds of backroom maneuvers to ditch a suddenly vulnerable candidate who has become embarrassing for them. That doesn't change the fact that he is the candidate they chose and cleared the way for.

"And it doesn't change the fact that election law is clear that the deadline for changing the federal ballot has passed. They can parade people they might desperately prefer to accused criminal Chris Collins in front of the press, but they can't ignore the law."

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.