GOP congressman indicted for insider trading used $250,000 in campaign funds to pay legal fees

GOP congressman indicted for insider trading used $250,000 in campaign funds to pay legal fees
Rep. Chris Collins (R-NY) walks out of a New York courthouse Wednesday after being charged with insider trading in New York City. Federal prosecutors have charged Collins with securities fraud, accusing the congressman and his son of using inside information about a biotechnology company to make illicit stock trades. (Spencer Platt/Getty Images)

Rep. Chris Collins (R-N.Y.) reportedly used over $250,000 in campaign funds to pay his legal fees over the past two years, CNBC reported. While this is perfectly legal, campaign donors were likely not aware that their contributions were being used for these expenses.

Collins was arrested Wednesday on charges related to securities fraud. He is also currently under investigation by the Office of Congressional Ethics for unrelated allegations.

Why was Collins arrested?

Collins is being charged with 13 counts of security fraud, wire fraud, and false statements.

According to the indictment, as a member of the board of Innate Immunotherapeutics Limited, an Australian biotech company, Collins was alerted to the fact that a drug that the company had been banking on had failed its drug trials. Collins then alerted his son, who alerted his fiancée’s father. Both Collins’ son and the son’s would-be father-in-law were shareholders in the company and sold off their stock. Since they were able to do this before the public knew about the drug trial failures, they avoided $768,000 in losses when the company’s stock plummeted.

What about the House ethics investigation?

Collins has also been under investigation by the Office of Congressional Ethics since 2017 for potentially using his position in Congress to assist Innate Immunotherapeutics Limited.

On Oct. 12, the OCE recommended that the House Ethics Committee “further review the above allegation because there is a substantial reason to believe that Representative Collins took official actions or requested official actions that would assist a single entity in which he had a significant financial interest, in violation of House rules and standards of conduct.”

This investigation is still ongoing and unrelated to the charges of insider trading.

What else?

Since July 2017, Collins used $250,536 in campaign funds to pay for his legal fees, according to Federal Election Commission filings.

In 2017, Collins’ congressional campaign made six payments totaling $163,007 to Baker Hostetler, the legal firm representing Collins in his troubles with the law.

In 2018, the campaign made five payments worth a total of $87,529, with the most recent being a $28,676.68 payment on June 9.

Though Collins’ use of campaign funds for legal fees is legal, campaign donors might question this use of their money. A spokesperson for Collins’ campaign confirmed this but said that from this point onward Collins would pay for his legal fees with his own money.

Collins is currently up for re-election and, at least before his arrest on Wednesday, was expected to win easily. Collins has said that he does not intend to resign and called the accusations “meritless.”