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New York Representative Chris Collins Indicted for Alleged Insider Trading; Trump Team to Respond to Mueller Today; Defense Ends Cross-examination of Rick Gates in Manafort Trial; Aired 10-10:30a ET

Aired August 8, 2018 - 10:00   ET


[10:00:00] POPPY HARLOW, CNN ANCHOR: -- Chris Collins of New York. The allegations against him incredibly serious. The allegations -- securities fraud, insider trading.

Shimon Prokupecz standing by with the details. And Shimon, I do want to read for our viewers, as you walk -- before you walk us through the indictment. The allegation is, you know, wire fraud, securities fraud, false statements.

Here is the full statement coming from Representative Chris Collins. Let me read it. "We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name. It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Immunotherapeutics stock. We are confident he will be completely vindicated and exonerated. Congressman Collins will have more to say on this issue later today."

So that raises the question, will he hold a press conference? Will he issue a personal statement? This comes from his team. But again this is about a pharmaceutical company out of Australia that he sat on the board of while he was a sitting U.S. congressman until just April, right?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Right. That's right. And that's an interesting statement from the defense attorney because what the government is alleging in its indictment is that he was passing information, non-public information to his son, Cameron Collins, who is also indicted, and then that son was passing the information to other people, and they were trading on that information.

Look, he was the guy who knew what was going on here. He knew that there were some negative results according to this indictment on his drug trial. And he then took that information, the government says, and passed it along.

The other thing I think that's interesting here is that they are using -- in this indictment they talk about how he tried to conceal the trading and the issues surrounding the drug stock. One point in this indictment they mentioned how his office had issued a statement to a local reporter and the statement said, quote, "Neither Christopher Collins nor his daughter have sold shares prior, during or after Innate's recent stock haul, and that Cameron Collins had liquidated all his shares before the stock halt was -- after the -- sorry -- after the stock halt was lifted suffering a substantial financial loss."

And the indictment says this statement was written in a manner designed to mislead the public into believing that Cameron Collins had not sold any Innate shares prior to the public announcement. So essentially, there is an allegation here that he was issuing public statements to mislead the public, to mislead the investigators here into thinking that there was no insider trading. Clearly this indictment spelling out -- this 30-page indictment spelling out a quite different story. They have recorded phone conversations. They have wiretaps. They have text messages. All sorts of information in this indictment that brought these charges.

There will be a press conference over at the Southern District in New York later today where we expect to learn more information.

HARLOW: OK. Again, we're expecting to hear from the Southern District around noon. So two hours from now.

Shimon, thank you for the great reporting on this. Stay with me. Let me bring back in Paul Callan, our legal analyst and former prosecutor, Phil Mattingly, our congressional correspondent here as well.

And Paul, before I get to you with more on the indictment, as you've been reading through it, and the key parts, you know, you noted to me, Phil, the Ethics has been looking into him for a while. I mean, this is new to our viewers, but there were concerns.

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: So on Capitol Hill Chris Collins' association with Innate or the company --

HARLOW: Sitting on the board.

MATTINGLY: Is not a secret.


MATTINGLY: In fact, it became kind of legend on Capitol Hill that he used to talk up the company to his colleagues in the House speaker's lobby on the House floor.

HARLOW: What? Like you should invest?

MATTINGLY: He was never hiding the fact that, A, he was on the board, B, he was a significant investor. I think at one point he was the largest investor in Innate.


MATTINGLY: And would talk up how the great he thought the company was, and wasn't really hiding that fact at all. I think one of the interesting elements, he stepped down from the board as part of the merger and the acquisition earlier this year but as far as I recall, he was the only member of Congress who was a sitting member on a board. HARLOW: Well, that's why I was so stunned reading that.


HARLOW: I actually checked with our producers, are you sure he was sitting on the board? That that's legal?

MATTINGLY: And so it's one of these things that when you talk to Chris Collins about it, and I haven't in months because we didn't know this was coming up. But he clearly believed in the company, didn't hide the fact that he was involved in the company, but it brought a ton of ethics scrutiny. You had the Office of Congressional Ethics that looked into it, did a report and then referred it to the House Ethics Committee which decided to launch an investigation. That doesn't mean he is guilty or innocent.

HARLOW: Right.

MATTINGLY: It just means that they were looking into it. That's the body in the House that actually does this. So on Capitol Hill people were very clearly aware that this was an issue. He was sitting on the relevant committee, the House Energy and Commerce Committee.

HARLOW: Right.

MATTINGLY: That oversaw the issues that this company was involved in. So there are a lot of entanglements there that people were keeping an eye on.


MATTINGLY: We didn't know it had escalated to this point.

HARLOW: But just -- I mean, just say that again. This is a guy who sits on a number of key committees. House Energy and Commerce being the key one here. Right? He's also on Oversight and Investigations. He's also on the Communications and Technology Committee but he was on the relevant committee in Congress that oversees the pharmaceutical sector.

MATTINGLY: And there was some question in a bill that was passed and signed into law last Congress that he actually played a role in writing provisions that may have actually helped the company.

[10:05:03] Now he denied that that actually happened at the time. But again, it's one of those things where at first glance, it looks bad. He tried to address it. He eventually stepped down from the board. He remained, as far as I knew at the time based on his disclosures, still a significant investor but very clearly, despite what he said, at least according to what DOJ is alleging right now, there are more issues there.

I will tell you on the -- what the Justice Department is alleging based on my first read of the indictment, it's far more than we knew the Ethics Committee was looking into at the time. So it appears that things had escalated from what they were initially. HARLOW: And just to be clear here, this is not just a securities

fraud charges in the indictment. It's securities fraud allegations, wire fraud and false statements. If you think about significant people who have gone to prison over things like this, if you think about Martha Stewart, for example, it's not necessarily about the security fraud. It can be about false statements and that's a key here as well. What statements did you make to the authorities when they questioned you about it.

MATTINGLY: Right. That ends up often being -- especially large public officials, that often ends up how they get caught up. I'll note something else. We've heard this again. This has been floating around for years. That behind the scenes, he would bring in folks from NIH or from relevant agencies and talk to them about --

HARLOW: The National Institutes of Health.

MATTINGLY: The National Institutes of Health and talk to them about this company and about some of the drug trials. Again, said he wasn't doing anything untoward. He just believed in the company. Just one of those things --

HARLOW: How is that legal?

MATTINGLY: It kept raising concerns. And look, your questions are the same questions that a lot of lawmakers had, same questions a lot of outside advocacy groups were concerned about as well. And that is precisely why the Office of Congressional Ethics began an investigation. It's why they released a report detailing a lot of these meeting with folks from the National Institute of Health and why they referred it to the House Ethics Committee.

HARLOW: OK. Paul Callan, you have read through this 30-page indictment. Walk me through what stands out to you most and then we're going to dig into this paragraph 21 here that seems to really be key.

PAUL CALLAN, CNN LEGAL ANALYST: You know, and circling back to a point that you made earlier about how unusual this seems that a member of Congress would be sitting on the board of a huge corporation.

HARLOW: For-profit company.

CALLAN: Exactly. Now this is a company, Innate, that manufactures drugs and runs drug trials. And he's talking up the company in Congress and guess who regulates these trials? The FDA, which answers to Congress. So yes, the public I think would be shocked that he sat on the board, and, by the way, according to the indictment, held millions of shares in the company. In fact, I think he held one-third of the shares in the company.

Now just walking you through quickly on a 30-page indictment, the indictment charges that the congressman passed along to his son, insider information about a drug trial, a successful drug trial that was done on a drug that could markedly increase the price of the stock. The indictment further alleges that the son, Cameron Collins, passed the information on to an individual named Steven Zaski who then --

HARLOW: Who is the father of Cameron's girlfriend.

CALLAN: OK. Very good. And I didn't see that, but you did. So yes. He passes the information on to Zaski, who in turn sells stock and that's, in essence, the securities fraud and insider trading counts.

Now there are also counts involving false statements made to federal authorities and you've outlined I think earlier in your introduction how some of those statements were made in a public setting by the congressman and they are referred to in the indictment.

HARLOW: Can we go to paragraph 21 of the indictment here? Because our justice reporter, Laura Jarrett, who's also been poring through this, points out to me that that really seems to stand out. And that discusses the number of calls from him, from the congressman, to his son right after learning the damaging information on the drug is key here.

I'm going to bring Shimon in as well as you pulled that up.


HARLOW: Because, Shimon, this is -- you know, one of these calls happened apparently -- it's alleged here by the Justice Department, it happened while at a White House picnic.

PROKUPECZ: That's right. And it happened -- this is a call from him to his son. Now this call comes after Collins, the father, the congressman here, according to the indictment, this happens around June 22nd, 2017. The father, Christopher Collins, gets an e-mail from the CEO of this drug company, Innate, basically saying -- it was to him and the board of directors -- that the drug trial had been a failure. Right? Pretty big deal here.

Then within less than an hour, at around 7:16 -- so the father, the congressman, gets the call around 6:55. At 7:16 there is a six-minute phone call, according to the indictment and in the phone call they say that during the six-minute call at 7:16 p.m., Christopher Collins spoke to Cameron Collins, his son, and told him in sum and substance that the drug had failed, the drug trial.

He conveyed, it says, the material, non-public information, to his son knowing that it was a breach of his duties to the drug company and anticipating that his son would use it to trade and tip others.

[10:10:11] So that is the essence of the charges here, of the indictment. It's not clear how they know the sum and substance or what that conversation was about. It does not say. So either he was someone -- whether it was the son or whether the congressman was being wire-tapped or somehow during the investigation perhaps maybe the son may have told investigators. But that is essentially --


PROKUPECZ: And Paul can talk about this more certainly, is the crux of these charges, of these allegations.

HARLOW: OK. Shimon, stay with me. Thank you.

I mean, you've got three key players here according to the government's indictment here. And whether they all have the same story, whether they're all saying the same thing, what these false statement charges are stemming from are all still big questions.

CALLAN: Yes. And this series of calls demonstrates that you have information from the CEO of the company, passed along to Congressman Collins who sits on the board, who immediately passes the information by telephone along to his son. The son then starts selling shares off the next morning. Now the defense has said, by the way, in a public statement already that he lost money on the trade, and therefore this kind of looks like this wasn't an attempt to profit on inside information. But you can profit on inside information by limiting your losses.


CALLAN: There may be the claim that we'll hear later this afternoon that by selling right away --

HARLOW: When you sell.

CALLAN: Yes. Before the public became fully aware that this drug trial had failed and that a particular drug was going to decrease in marketability. You got an advantage over the public.

HARLOW: Well, I think it's notable looking at the statement from his defense attorneys, this line. They say, it is notable that even the government has not alleged that Congressman Collins traded a single share of Innate therapeutics stock. It's not just about you sell or buy or trade on. It's what you pass on and what is done with that as well.

MATTINGLY: Right. It's a non-public information you have.

HARLOW: Right.

MATTINGLY: And give that non-public information, too. And his lawyers are making a point. I remember when this happened because there were headlines about the biggest investor, a sitting congressman, got crushed when this -- when the trial ended up not doing as well as it was supposed to be. Millions of dollars potentially lost. I think he had something like 18 percent, 19 percent of the stock at the time when it happened.

But again, it's not just if he took losses or if he was selling off stock. It's as if he was telling somebody else as well which appears to be, if I'm reading right --


HARLOW: Well, and are you trying to help your family members, your son, you know, the father of your son's girlfriend. You know, are you trying to help them profit or at least lose less. That's key here as well.


HARLOW: Let's go to Capitol Hill. I think we have Manu Raju standing by with me?

So, Manu, what's the reaction?

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, so far silence. We've tried to reach out to the speaker's office, try to get a sense on whether or not they have any reaction. Probably waiting until that press conference emerges, until Chris Collins releases a fuller statement about this. But one thing that is becoming clear from just some early indications from people close to Collins is they're going to fight this pretty aggressively.

You saw that statement that you were showing earlier, Poppy, saying that they do not believe that there is anything that shows any wrongdoing. They believe that he will be exonerated. In a lot of ways they look at what happened to Bob Menendez, the Democratic congressman -- senator from New Jersey who was indicted on federal corruption charges but he was acquitted on those counts earlier.

They view that as a model of sorts. This is something that they believe they can fight, this is going to be a battle. And a lot of ways in the PR battle ahead in the -- ahead of the election time to try to convince voters and try to convince the public that he didn't do anything wrong here and that he is being a victim of a witch hunt of sorts.

The ultimate question, too, is how much does the White House, and how much does the president get behind Chris Collins, whether or not they believe what Chris Collins has to say because Collins was one of the president's earliest supporters, probably his first supporter on Capitol Hill, day in, day out, during the 2016 primary campaign. He was defending Donald Trump and no doubt the president remembers that and rewards loyalty.

So what does the president do right now? What does the White House do right now when one of its closest allies has been indicted on some very, very serious charges and which Collins himself has said that he's going to fight very hard to clear his name. We expect to hear more from him later. We'll wait to hear what the Republican leadership has to say, too. But so far, Poppy, silence from Capitol Hill as members are starting to digest this very surprising news this morning -- Poppy.

HARLOW: Just quick follow-up on something you said that I think is important, Phil Mattingly. He was saying, you know, if they try to, you know, say, look, this is like Senator Bob Menendez who had these federal corruption charges against him. It's not really apples to apples. I mean, but t securities fraud, it's different. And with Menendez, it was, well, was there a quid pro quo for these things?

[10:15:02] I mean, you've got -- the Justice Department in this 30- page indictment lays out the evidence that it says it has here against him for securities fraud, for wire fraud, for false statement. So it's not an exact apples.

MATTINGLY: Yes, I'm intrigued to see how they actually try and roll this out.

HARLOW: Right.

MATTINGLY: I think maybe more broadly. Menendez's defense was explicit and robust and unyielding. And I would imagine knowing Congressman Collins and having dealt with Congressman Collins for the better part of the last couple of years that is absolutely the role that he'll take. And again, I think one of the interesting elements about this is how public he's been and had been about his role at the company, his belief in the stock and his belief in the company. And maybe that plays into what they say going forward.

HARLOW: Yes. Right. Apparently we have more breaking news. I need to get a break in. Stay with me. Everyone, Shimon, Phil, Manu, Paul, thank you all very much. I'll be right back.


[10:20:11] HARLOW: All right. We do have even more breaking news just in to us. Our Dana Bash reporting that the president's legal team, that would be Rudy Giuliani and the other lawyers around the president, have agreed and plan to send their counteroffer to Special Counsel Bob Mueller today. What does that mean? It means they are trying to negotiate terms of a presidential interview with the special counsel in the Russia probe.

Let's go to Shimon Prokupecz with more. This has been a back and forth and a back and forth. What's Giuliani saying now?

PROKUPECZ: Yes, it certainly has and it is a big question of will he or won't he? Will he voluntarily -- will the president voluntarily submit to questioning by the special counsel? As you said, Rudy Giuliani this morning saying that they're sending their counteroffer to the special counsel after they had received an offer from the special counsel last week, a letter stating that they would limit some of the questions.

The key question here is will the special counsel be allowed to question, -- that is in person, sit down with the president and ask him questions about obstruction, Rudy Giuliani and the Trump team are trying to limit that.

Let me go ahead and read something from Rudy Giuliani that our Dana Bash got. And essentially what Rudy Giuliani says is that it is a good faith attempt to reach an agreement. He then says there is an area where we could agree. If they agree, meaning the special counsel. So clearly negotiations still under way. We don't know exactly what the Trump team is trying to do here, what their offer is.

We know that they were trying to limit the questions of obstruction because obviously that is where perhaps they feel that the president has the most sort of kind of chances of perhaps maybe facing some kind of violation, some charges or there may be a report that may be issued which would be negative on the whole obstruction issue so they were trying to limit his exposure on that.

We don't know exactly what Rudy Giuliani and the team is presenting to the special counsel. But nonetheless, significant in that they are still negotiating, still trying to work this out.

HARLOW: OK. Thank you very much, Shimon, for walking us through all that reporting.

Let's get the legal take on it. Paul Callan is with me on yet another story. On this this morning. We know that Giuliani, the president's team, indicated to Politico when it comes to questions about obstruction, quote, "We'll leave a little wiggle room."

The issue is not whether the special counsel is going to ask the president if he sits obstruction questions. It is whether they are all in writing as the president's team wants them to be, or whether Mueller can get some in this person. Why is that so significant?

CALLAN: Well, and I also think it goes beyond that because Giuliani has previously said that it is the position of Trump lawyers that Mueller only has the right to question the president about information he can't get from other sources. In other words --

HARLOW: Right. From a document.

CALLAN: By getting it from documents or even from aides that he's interviewed. So what's left? Well, the only thing that's left is what was the president's intent, what was in his brain when he fired Comey, when he made various statements. And Giuliani also said, well, we might let them ask a couple of questions. Well, I can assure you that the Mueller team is not going to accept that position because any prosecutor knows that you have to follow up on initial answers.

People try to prevaricate and try to avoid getting to the point. Sometimes it takes 20, 25 questions before you can pin somebody down on a specific fact. So I don't think this is going to be productive at all if this is the position the president was taking.

HARLOW: OK. Let's see if they can come to terms and if the president does sit for an interview because this has been a hanging question for months and months.

Paul, thank you. Shimon, thank you for the reporting.

And we're also following the trial of Paul Manafort in federal court in Virginia. The defense has ended its cross-examination of Manafort's deputy Rick Gates. We will have a live report outside the courthouse next.


[10:29:10] HARLOW: Right now, Rick Gates is back on the stand. The prosecution is redirecting him, asking him questions once again. The cross-examination just ended moments ago.

Let's go to Joe Johns, he is outside of the courthouse with more. So this was a cross that spanned two days. Now it is a redirect from the prosecution here. What can you tell us?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Right. Sort of breaking that down. Redirect is an opportunity for the prosecution to reexamine the witness, Rick Gates, to attempt to rehabilitate him, if you will. That would mean repair any serious damage that the government thinks was done to their case on cross.

The cross-examination did end. It was very brief this morning. And Mr. Gates was asked about a meeting in July of 2014, a time when he and Mr. Manafort sat down and talked to the FBI where the main takeaways from that testimony is that it was Gates now testifying at the end of his --