How the Buffalo News stayed ahead of the insider trading story that took down a congressman

Buffalo News' Jerry Zremski. Robert Dodge Photography.

In June 2017, New York Representative Chris Collins––the first congressperson to endorse Trump––was at a picnic in the White House lawn when he received an email alerting him that an Australian pharmaceutical company he invested in, Innate, had failed clinical trials. Collins, who had been encouraging other members of congress to invest in the stock, then called his son and advised him to sell his shares before the information became public. Collins’ son and his son’s fiancee’s father sold their stock, saving hundreds of thousands of dollars. Last week, the congressman pled guilty to one count of conspiracy to commit securities fraud and one count of lying to the federal government, while the other two men pled guilty to one count each of conspiracy to commit securities fraud. Collins could face almost five years in prison, while his son and his future father-in-law each face up to 46 months in prison.

JERRY ZREMSKI, Washington bureau chief for the Buffalo News, was at a Roseanne Cash concert in June 2017 when he saw the news of Innate’s failed trial. Collins, who represents the suburbs of Buffalo and Rochester––the reddest district in the state––had been an investor in the company for years. Almost immediately, Zremski had a sense that the story could spell scandal, or worse, for the New York congressman.

Zremski’s relationship with Collins began in Buffalo around 1985, when Zremski was a business reporter. In 1989, Zremski moved to the News’ Washington bureau; he did not come across Collins again until Collins ran a losing bid for Congress in 1998. Collins, who later became Erie County Executive in 2007, had a contentious relationship with the local press corps which aggressively covered his cuts to popular programs such as libraries, community college, and daycare. 

But by the time Collins won his congressional seat in 2012, Zremski had a productive working relationship with him. “I did some positive stories about him,” Zremski says. “His office dug up some stuff that was interesting that made good stories for me. He was a good source.” Periodically, Zremski asked Collins about his ties to Innate, but the congressman maintained that there was no conflict of interest; Innate, Collins said, had no business in the United States. 

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In early 2017, the Wall Street Journal broke news on Collins’ suspicious ties to Innate. Zremski was on vacation in Taiwan at the time; his distance from the story, he says, felt “pretty miserable.” He played catch-up when he returned, and got ahead of the story by summer, when he spotted a press release from Innate announcing that a drug intended to treat multiple sclerosis had received clearance from the US Food and Drug Administration to begin clinical trials.

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“Well for how long has Collins been telling me this company has nothing to do with the federal government?” Zremski says. “So I did that story.” The headline on Zremski’s piece read, “Collins said drug company had no business before feds — but it does.”

Their relationship eventually devolved to the point where Collins would only speak to Zremski in a press gaggle. “He wouldn’t even look at me,” Zremski says. While being cut off from Collins and having a stilted relationship with his press team posed challenges, he says, “it didn’t really surprise me or trouble me, or change what I was going to do.” (Collins’ office did not return requests for comment.)

As soon as the news that Innate had failed its clinical trials broke, Zremski says, “I knew what was going to happen.” Australians couldn’t trade Innate stock for three days prior to the announcement, but no such hold took place in the United States. “That’s where they were able to dump the stock,” Zremski says. Collins, equipped with inside information, encouraged his son to sell his stock. His son then passed along the scoop to his fiancee’s father, another investor in the company. On the day that Innate’s failure became public and the stock plummeted, Zremski says, “everybody’s first interest is how much money has Chris Collins lost?”

Zremski wrote a story in the early hours of the morning to keep up with the market in Australia. By the end of the day on the other side of the world, Innate stock had lost 90 percent of its value—a decline that cost Collins between $5 million and $44 million, Zremski wrote

What’s transpired in the time since I wrote that story in June of 2017 has pretty much proved me right.

As Zremski’s day pressed on, he recalled reporting he had done in the eighties about pump-and-dump schemes, in which a company’s stock price is artificially inflated by false or misleading statements shortly before delivering bad news about the company, allowing for investors and others with inside information to sell the stock at an artificially high price in the interim. 

“Immediately I thought, ‘Did this happen?’” Zremski says. He found an Australian chat board for investors; it was filled commenters who felt Innate bore the signs of a pump and dump. He called a credible Australian investor, and started to piece together a pattern of Innate stock being sold during that three-day window. Then he questioned Collins’ family, who were key shareholders . They denied they had sold their stocks. Zremski suspected otherwise; his story on Collins’ family’s ties to Innate and their press team’s denial of any wrongdoing ultimately appeared in a 2018 indictment charging Collins with conspiracy to commit securities fraud.

Throughout the steady drip of Zremski’s stories, the pugnacious Collins stood firm. During his reelection campaign, he fundraised off Zremski’s work; one campaign email included a subject line that read, “Enough of the Buffalo Fake News,” and accused the paper of “making up fake news on folks [it] can’t beat at the ballot box.” 

“I’ve met it mostly with multiple rolls of the eyes,” Zremski says. “It hasn’t really bothered me because, honestly, his actions and what’s transpired in the time since I wrote that story in June of 2017 has pretty much proved me right.” 

The community in Buffalo, where Zremski believes print is alive and well, has been mostly receptive to his reporting. “We have an extremely close relationship with our community,” he says. While covering Congress, he focuses on how the federal government touches lives in Buffalo. He writes about veterans’ issues, immigration, and other topics that matter to the families of his paper’s hometown. And though he’s based in Washington, he travels back to Buffalo several times per year to stay in touch with what the community wants to read. 

The News is one of a rapidly shrinking number of regional papers with a Washington bureau. This year, it was selected for the Google News Initiative Subscriptions Lab, an effort to build digital subscriptions for local newspapers, alongside the Baltimore Sun, Houston Chronicle, and Charleston Post and Courier among others.

“Imagine if the Buffalo News didn’t have someone watching the members of Congress closely,” Zremski says. “Stories would not have been done in June 2017. And when and if Congressman Collins had ever gotten arrested, we would have been playing catch up.”

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Correction: an earlier version of this story suggested that Collins himself had sold stock in Innate rather than members of his family. 

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Savannah Jacobson is a CJR Delacorte Fellow. Follow her on Twitter @srjacobson1.