Busted for using his office as a cash-grab and for violating securities law on the White House lawn, Collins keeps coming back.
|Dec 23, 2018||Public post|
When people ask me about Chris Collins—friends, family, regular readers of my work—they often refer to him as “that congressman you busted.” While Collins was arrested and indicted nearly two years after I acted on a tip and began investigating him, he never got busted for any of the dirt I found under his fingernails. As I wrote in November, that’s what remains so incredibly frustrating about Collins—for all the shady business I found him engaged in, he hasn’t been held to account for any of it.
The piece below was supposed to be the first edition of this newsletter, but I got distracted with some immigration news, insane findings about Facebook, and our economy coughing that first cough that makes you realize a bad cold is coming on, except this time the cold is a flu called a recession.
I thought I’d break down the Collins saga in a way that my various hard news stories on him don’t. He truly is the perfect subject for Where Do We Go From Here, which is based on the premise that we are being led by people who possess the dangerous combination of ignorance and arrogance, unblinking self-assuredness and blinding stupidity.
Many of them, like Chris Collins, are proud to also conduct themselves in the Trumpian manner of having absolutely zero shame over their misdeeds and crimes. Collins and Trump really are the perfect politicians for this very dumb era. Collins is himself is like a mini-Trump, a test case for how candidates as unthinkably uninformed and corrupt as the president will perform at a local level, where politicians’ decisions have a more direct and lasting impact on citizens’ daily lives. So far, things are looking pretty good for that political animal: despite being under federal indictment for a financial crime, Collins won re-election.
I plan to launch investigations into other lawmakers in the coming year. I dare not say I won’t find anyone as nakedly corrupt as Collins, but it really is difficult to imagine stumbling upon a more shady politician knowing what I currently do about his many conflicts of interest.
As the stories about Collins and his fellow corruptos of the Trump era pile up it will hopefully provide a greater understanding of how we largely failed to respond to the greatest challenge of our time—climate change—in favor of making sure no one touches our guns, of giving massive tax breaks to corporations and the super wealthy while saddling the nation with historic debt, and of creating a completely unfounded White Panic amongst an entire generation of voters about Brown People emigrating here.
Come to think of it, this’ll actually end up being a long list by the time it’s all said and done. But until then, we begin with one Christopher Carl Collins of Clarence, New York.
Like all epics, we must start at the very beginning, which in this case occurred on a stingingly cold night in Chicago in the winter of 2015. Over Malorts and beers at my corner spot at the Billy Goat, a friend from DC began telling me about Collins, then an unknown backbencher who hadn’t yet become the first member of Congress to endorse Trump for president, thus giving him that instant and tacky boost of fame that everyone who chooses to grovel at the Trump’s feet is granted by his adulating fans. Collins was in deep with the pharmaceutical industry, my friend said. He was trying to cut an obscure government health care program called 340B, she told me in excruciatingly wonky detail. I had to stop her. What is he doing that’s so shady and potentially illegal? I asked. Why, in other words, should I care?
Because 340B helps poor hospitals in inner cities and remote rural communities afford outrageously priced prescription drugs, she said. And Collins was going after it because in addition to the program helping out poor people, it was also screwing over the pharmaceutical industry (although not by much in the grand scale, which I’ll get to later). Plus, he was brazen about his corruption. He didn’t care or didn’t seem to care that everyone knew about his connections to Big Pharma. He bragged about “how many millionaires” he’d made while talking to colleagues on the House floor. He was, in the very truest form of the phrase, a scumbag politician. And if there is one thing reporters will get fired up enough to do something about over beers and Malorts late at night in the barroom where Mike Royko once sat with Studs Terkel, it is scumbag politicians.
I began digging as soon as I made it back to Texas. The blueprint was already there, thanks to the incredible reporting of Emily Kopp and Rachel Bluth of Kaiser Health News. They’d discovered a network of Collins’ family, friends, business contacts from Buffalo (where Collins owns several companies) and fellow congressman who were all invested in an Australian pharmaceutical company called Innate Immunotherapeutics. Weird, right? Or was it? If I knew of an obscure company that had a potentially groundbreaking drug—and Innate did in MIS416, a treatment for secondary multiple sclerosis that would have been worth millions had it not failed in trials—I might want to tell my people about it and help them get in on the action. There’s just one problem with this: if you’re a director at a company, like Collins was, it can be illegal to tip people off to hot stocks. That’s because as a director Collins had what’s called material non-public information. It’s the type of insider knowledge that, if dropped at a certain time, could save or make investors a ton of cash. That’s what Collins was finally busted for—telling his son to dump his stocks because Collins had just gotten an email from Innate’s CEO that said MIS416 was a dud.
Knowing that the failure of the drug would mean tens of thousands of dollars in losses for his son, Collins called him up to tell him the bad news and, allegedly, to dump his shares in Innate. If Collins’ son were anyone other than Collins’ son, he likely wouldn’t have known that material non-public information. That he did was a crime on Collins’ part, and one committed from the White House lawn.
Kopp and Bluth had exposed the spider web of connections between the company, its investors and Collins. If anyone should be given credit for busting Collins, it’s them, because they were the first on the scene when the body was still warm. I went a little further, and after five months of digging, went to print with a story about Collins introducing or sponsoring legislation that would have helped Innate.
But there was so much more. At every step in the Collins saga—my discovery of the bills he wrote to help Innate, his targeting of 340B, his millions invested in Big Pharma stock while working to gut Obamacare, his lie about divesting from Innate, and his most recent bill to help Innate—I was trying to find a silver bullet that had eluded me. From that first night in Chicago until now, I have worked under the assumption that Collins wanted to gut 340B because it would mean more money for his company. At times I’ve come close to finding the irrefutable evidence I needed—which I naively thought would amount to the type of unethical conflict of interest to send this guy packing back to the Buffalo American Legion where he belonged. After spending months trying to get DC insider types to cut through the bullshit language of a bill draft I’d obtained, I was more or less able to tell the world that Collins was trying to do what I’d expected: make Innate more money, by removing infusion (injected) drugs from 340B. And wouldn’t you know it, Innate’s drug was just such an infusion drug. Purely a coincidence, I’m sure! (For context, consider that infusion drugs—the most expensive on the market because they treat the most deadly diseases—make up more than half of the discounts required by 340B and cost the pharmaceutical company tens of millions in profits each year. If Innate’s drug hadn’t failed and Collins had succeeded in removing infusion drugs from the program, for Innate it’d be like the difference between going to the North Shore of Hawaii over the Gulf Shores of Alabama. No comparison.)
That story went live in April and got a decent amount of attention. It didn’t “set the world on fire,” as my editor is prone to say and as I’ve become resigned to expect in an attention-deficit news cycle that has great difficulty seeing past whatever Trump has tweeted in a given day. Meanwhile, Collins kept introducing bills that would help Innate. In July, I got last-minute word that his committee would introduce one of those bills along with 13 others at a hearing on 340B. I booked a ticket, flew to DC, and found my way to the hearing. There were hardly any reporters there but the seats were packed with lobbyists, most of them likely from the pharmaceutical industry. One congressman suggested that 340B hospitals in California were providing botox injections and writing them off under the program’s discounts—a laughable claim that experts told me was virtually impossible.
Collins looked a bit older in person than I’d expected. He lounged in his chair for two brief stints in the hearing room before retiring to his office. I haven’t seen him since.
A month later I was back in DC. I awoke in my hotel room on my final day there to the news that Collins had been arrested. Writing on my phone on the way to the airport, in the security line there, and finally on the plane back to Texas, I jumped in on the story of his arrest and indictment. I felt vindicated in my years-long pursuit of Collins, but disheartened at the same time: none of the shady stuff I’d found him doing was even in the indictment.
Introducing bills that could put more money in your pocket isn’t necessarily illegal. It isn’t even against the rules of Congress, really. This is obviously a major problem in Washington, or at least I think so. One of the more frustrating aspects of reporting on Collins—from a media accountability standpoint as it applies to other rich politicians—is that he’s only the 19th richest member of Congress. So my two-year odyssey to figure all this out would have to be repeated 18 more times to unspool all the conflicts of interest that politicians even wealthier than Collins are tangled up in. (It’d take even longer than that for some of them. When I wrote about the 40 Republicans who backed President Trump’s failed replacement for Obamacare and who were heavily invested in Big Pharma, my girlfriend and I spent an entire weekend going through their financial disclosures. For the richest lawmakers, those documents can be more than 100 pages long.)
But wealthy politicians have always worked on issues that could affect—even if only in some small way—their investment portfolios. If you barred all members of Congress invested in a certain industry from working on any legislation that affected that industry, you’d have a lot of lawmakers sitting around doing absolutely nothing. That’s because, in addition to the very wealthy members who are directly invested in companies—meaning they themselves or through a stockbroker have actively traded shares in Lockheed Martin, for instance—nearly everyone in Congress has a mutual fund of some sort that holds investments in scores of companies.
Some wealthy members choose to place their substantial investments into blind trusts, meaning the day-to-day trading of stocks is handled by someone other than the lawmaker or a stockbroker consulting directly with that lawmaker on trades. This system is designed to ensure that our elected officials aren’t making decisions on laws that could enrich themselves through their investment holdings. When Jimmy Carter became president, he placed his peanut farm into a blind trust to avoid any potential conflict of interest. When Donald Trump was elected, he chose not to place his sprawling global empire of companies worth billions of dollars in one.
What makes Chris Collins unique is that the lion’s share of his investments in the health care industry were in a single company, Innate Immunotherapeutics. And not in any small amount. At one point, Collins had $22 million in Innate stock. That made him the largest shareholder, owning 16.5 percent of the company.
This provides incentive. More so than, say, a lawmaker who happens to own a million dollars in Defense Company A and two million in Pharmaceutical Company B. Yes, those members of Congress are conflicted and probably shouldn’t be working on laws that would affect those company’s profits, but the conflict of interest is more diluted. (Ethics hardliners argue that members of Congress should be prohibited from directly owning stock in any company to avoid potential corruption. Others point out that it’s just as much their right as anyone else’s to make money through investments.) While many of Collins’ colleagues had diluted conflicts, his was direct—innate, one might say.
Collins held nearly $30 million in stock in Innate and two other companies he personally owned. He introduced at least five bills that could help those companies. The Office of Congressional Ethics—a non-partisan body with no enforcement teeth—discovered Collins had asked a government scientist to help Innate with its next drug trial.
This goes beyond conflict of interest to blatant corruption, Collins’ critics say. And yet, Collins has not been held to account for any of it, save in my stories and whoever decides to read and amplify them.
Over the years, Congress, mostly Democrats, has tried through legislation to find ways to reduce corruption of the sort Collins has taken part in. One such bill is the STOCK Act, which prohibits lawmakers from taking part in a company’s initial public offering. But Collins side-stepped that law by buying up discounted stock when Innate launched its IPO. He was able to do so because, I found, a loophole in the STOCK Act only prevents members of Congress from taking part in American IPOs, not foreign ones. The STOCK Act was created because, as a general matter, average Americans don’t usually field offers from companies looking for investors to take part in their IPOs. Those IPOs can be a huge deal. Consider when Apple, Facebook and Twitter first went public, and imagine if you could have gotten in on the ground floor. A lot of us would have liked to but weren’t given the chance. Members of Congress, however, have been given those opportunities—and have taken advantage of them, to their pocketbooks’ delight.
Collins’ exploitation of the STOCK Act’s loophole has two possible explanations. Either he was too stupid to know the STOCK Act existed and lucked out by unintentionally exploiting a loophole that I discovered years later. Or he has a lawyer or lawyers with basic reading comprehension skills who knew the loophole was there and told him he’d be fine because Innate’s IPO was in Australia. I’ll go with a combination of the two: too stupid at first when he did it, then lawyered up when I asked his office about it years after-the-fact.
I always thought that Collins would be re-elected. Now back in Washington, he remains unable to take part in any business of the committees on which he sits, including the one where he introduced the bills that would have helped Innate. That’s because Paul Ryan barred Collins from his committees after he was indicted—a rare rebuke amongst Republicans to one of their own. Now, a group of House Republicans has proposed a rule that would prohibit any members under indictment from taking part in committee business. On a day-to-day basis this means Collins is essentially be limited to raising money for himself, money that will probably go to his legal defense. If he’s convicted, he’ll be removed from office and his constituents in Western New York will be without a representative until a special election is held.
But I’d argue that they’ve already been without representation. From his first year in office in 2013, Collins has worked almost exclusively to help Innate, his other companies and the pharmaceutical industry at large. (Many of his other bills are largely ceremonial proclamations—naming a post office after a fallen soldier, for instance.) Unfortunately, many voters sent Collins to Washington to do exactly what he’s been doing. The same goes for Trump. That’s because there is a belief among many Americans that the country should be run like a business, and that businessmen like Collins and Trump are in the best position to do so.
There are several problems with this, but the first and foremost that comes to mind is that without diligent reporting we don’t even really know who our elected officials are working for—the country’s business or their own. With 535 members of Congress, each with at least a handful of investments, the amount of reporting that would be required to discover the potential of conflicts of interest that they possess is staggering. Trump is perhaps the greatest example of this. Without having access to his tax returns, there is no telling how his global network of companies could affect his decision-making. The only reason myself and others got at Collins is because Congress requires him to regularly release information about his investments.
The other issue at hand is that sending businessmen to Washington to apply their skills to government doesn’t always end up helping the average American. Sure, there are a handful of people in Buffalo—those close enough to Collins to get tipped off to Innate—who I’m sure appreciated his lawmaking work on behalf of the company. But most people in Western New York haven’t seen any benefit from the company’s good fortunes, which Collins spent so much of his time as a lawmaker striving for.
On this note, whether it’s Innate, the Trump Organization, or a lawmaker’s general contracting business back home, investments and deep ties to companies offer too much temptation to ignore. I’m sure there are many members of Congress who have the ethical fortitude to ignore a bill’s potential positive affect on their investment portfolio and vote against it]. I do not think Chris Collins is such a lawmaker. At the very least, members of Congress should be required to place their investments in a blind trust. I don’t think it’s too much to ask, either, that lawmakers not sit on boards of companies. (Not only did Collins sit on Innate’s board, but those of two other companies he owns, which are both in the medical device industry, another issue he has inserted himself into.)
But I don’t think either of those things are going to happen any time soon. So the best way to prevent Collinsian corruption is to not elect people like him to Congress in the first place. This means the Collinses and Trumps of the world get to remain in the private sector and make the same incredible sums of money that most Americans will never see. It also means that they won’t be able to use the powers of government to make even more.
Collins, through his entanglements with Innate, and many of his Republican colleagues, through their own investments, are heavily beholden to the pharmaceutical industry as it lobbies Congress to cut 340B. They have—with the direct help of Big Pharma—made a series of arguments as to why 340B needs to be cut, and Collins has led the charge. The program has expanded and now includes about half of US hospitals, Collins says. The discounts offered by the program—which are also direct losses for the pharmaceutical industry—have greatly expanded, he has reminded us. The industry is simply losing too much money, Collins and his fellow Republican congressmen say, and it’s not fair.
But how much, exactly, is too much?
To be exact, because I did the math: 0.000035 percent of the entire industry’s annual revenue.