S1: When senators in D.C. want to avoid tough questions from reporters in the halls of the Capitol, they’ve got a trick. You might have used this one, too. They simply pretend to be on a cell phone call, rushed by with an air of distraction duck into an elevator. But as of last week, at least one senator was not able to deploy this trick anymore. Senator Richard Burr. Are you planning to participate and cooperate with investigators? You can find video of Senator Burr last week getting peppered with questions. He’s wearing a University of North Carolina Tarheel mask and he’s got nothing in his hands and nowhere to hide. Have you turned your phone over to investigators? The news had just leaked. The FBI had confiscated burs cell phone.
S2: We don’t know a lot. We just know that there was a warrant. It was executed and the cell phone was seized.
S1: Tim Mack is an investigative reporter at NPR and he has been following how Burr reached the point where his personal communications were being seized.
S2: This all revolves an investigation into alleged insider trading.
S1: The allegations go something like this. While Senator Burr was telling his constituents that the U.S. response to this novel coronavirus was under control, he was actually selling more than a million dollars worth of stock. And he did it all just before the market crashed. What are the challenges of investigating a senator like this? Because I imagine proving that there’s some kind of insider trading here, it will be difficult. I mean, the Senate Intelligence Committee, the briefings he got about the Corona virus maven confidential. So it’s hard to know. What did he know? And who can know what he knew? And then how that might have changed his mind about where to move his money.
S2: That’s true. But, you know, there are ways for investigators to get around that issue. For example, his communications with his family, his communications with his broker are not classified. They’re not confidential. They can be obtained by investigators. And if he explained his reasoning behind his transactions to anyone, it may be an indication of what happened here. What kind of information he was basing his transactions on.
S1: Tim Mak was one of the first reporters on this story.
S2: I don’t think that there was an expectation that this would balloon in this way. There was no telling at the beginning of this that it would become what is essentially become a criminal investigation.
S1: Today on the show, Tim is going to talk about the secret audio recording that he unearthed which helped launch this investigation. And how much trouble the senator is really in.
S3: I’m Mary Harris. You’re listening to what next? Stick with us.
S1: Senator Richard Burr, who until last week was the chair of the Senate Intelligence Committee, made these suspicious stock trades back in February. That’s when most of us were still going to work, going to the movies, riding trains and buses. The reason Burr is under suspicion for insider trading is because around the same time he cashed out that stock, he was saying remarkably different things about the Croner virus in public and in private, in public. He wrote an op ed for Fox News, said the Trump administration’s coronavirus response was going smoothly. But a few weeks later, when he was privately speaking to donors and lobbyists, he warned them to take the coronavirus threat seriously. And that’s where Tim Mak comes in. Part of the reason why Senator Burris stock sales seem suspicious is the context that we learned about them in. You uncovered this audio. Can we talk about it a little bit? This is audio from back on February 27. Right. Where’s it from? And what’s happening?
S2: I mean, I think in order to really understand that audio, we have to put ourselves back in the mindset of what the world was like in February. Right. And it’s hard to kind of think back to this pre Korona crisis era, but that’s not where we were on February twenty seventh. The stock market had not crashed. We hadn’t had all these stay at home orders. The first person had not died in the United States from the core virus. But on February 27. Senator Burr went to a luncheon with a group of well-connected constituents. These are people who are business leaders in North Carolina who have lobbying firms representing them in Washington, D.C.. He goes to this luncheon and he says that he’s worried that this coronavirus crisis will become probably as bad as possibly as bad as the 1918 pandemic.
S4: There’s one thing that I can tell you about. This is much more aggressive in China. And we do see is probably more akin to the 1918 pandemic.
S1: And he says it in this kind of like offhand way, almost like just, yeah, it might happen, which now, you know, we see it differently. But at the time, I don’t think people were really making that comparison as much.
S2: No, he seemed to really have dug in to this question of what the Corona virus crisis would mean for America. And he seemed to have some sort of information about how bad it would be. He warned about schools shutting down. He warned about travel being shut down, all of these things before most of the public had any inkling. The vast majority, the public had any inkling that this would happen.
S4: There will be I’m sure at times unities probably will have transmission rate where they stay in school for two weeks. Everybody stay home.
S2: He warned that military hospitals would need to be set up in order to create beds and provide treatment to people who were sick. Now, Senator Byrd never came to the mike and warned the public of his view on this, despite his expertise on bio threats. And he’s spent many years working on this issue. He never decided to warn the public, put out a press release, go to a television camera, go to any of the mikes of many reporters who stand in front of it, in front of him every day. He never wants the public. He wants this private group of individuals. And that’s pretty much it.
S1: Yeah. And a few weeks earlier, he’d written an op ed for Fox News where he’d basically said, we’re you’re in great hands. The Trump administration is going to really handle this corona virus.
S2: Well, right. His message was we’ve got all the tools necessary to deal with this coming crisis.
S1: And then as soon as you reported about this meeting, other information starts to come out about these stock trades. Tell me about that.
S2: Right. So there’s this piece of legislation called the STOCK Act. And the STOCK Act requires lawmakers to periodically disclose their stock transactions. And what ProPublica did was that they went through his stock transactions and realized something that I hadn’t found, which is that Senator Burr had in a series of very unusual transactions on February 13th, made 33 stock transactions and sold up to one point seven million dollars worth of stock on a single day. And that’s, remember, just a few days after that op ed you mentioned where he says, don’t worry, everything’s going to be OK.
S1: So a couple days after the op ed, he sells off a bunch of stocks and then a few days after that, he makes this speech where he says, listen, this corona virus is going to be bad. Now, you said he sold off. I think one point seven million dollars worth of stock. How big of a deal is that for someone like Senator Burr?
S2: That that probably is a very significant portion of his net worth. Senator Burr is not a wealthy senator. Relatively speaking, I mean, one point seven million dollars is a lot of money to me. But for a senator and someone of his age, his net worth is not particularly high among his colleagues. So this would represent a pretty substantial portion of his assets. And remember, he has said that he is not going to run for re-election when his term ends in 2022. So he’s presumably thinking about retirement and he makes a move here. It appears to secure his future.
S1: NPR teamed up with Dartmouth College to analyze Senator Burr’s transactions. They were looking at birth stock sales on this one day, February 13th, to see how they compared to trades he’d made in the past.
S2: So typically between 2012 to about twenty eighteen, twenty nineteen, Senator Burr is a very bad stock picker. On average, if you look at his stocks six months after he purchases a stock, they’re down. Point eight percent relative to other stocks in the same industry. And after a year, they’re typically down about six percent compared with that same benchmark.
S1: And we should be clear here, which is this is Senator Burr buying these stocks himself. Right.
S2: We don’t know about his history, but we do know that on February 13th, Senator Burr has said that he transmitted those decisions to his broker personally. I don’t know about his history, but it may be safe to say if he did it in this case, he’s typically been doing it. He is kind of lousy about stock picks. He doesn’t trade in high frequencies. You know, he would on average in a quarter every quarter would make an average of three point two stock sales. But on February 13th, he makes more than 30 stock sales on a single day. So 10 times get 10 times what he would normally do in a quarter. And not only that, these stock sales are amazing stock picks, incredibly well-timed, incredibly well chosen, because after the stocks were sold, the underperformed the market by eight percent. Right. That means that the stocks performed worse than comparable stocks in that same sector between the sale and the end of March, six weeks later. I mean, the stock market began to crash maybe a week later, 10 days later.
S1: I was looking through your reporting and I saw that you wrote to the senator’s spokesperson and said, hey, do you want to talk about these stocks hills and that prison roback just L.O..
S2: Well, that’s correct. That’s true. That happened. I can’t I can’t speculate about why that person would do that, but that that that did happen.
S1: So how does the senator defend himself here? How does he explain the stock sales?
S2: Well, the defense for an allegation of insider trading is to say, well, no, I didn’t use non-public information. I only relied on public information, information that you or I or anyone else would have. And so his argument is that he made these very well-timed, very precise, very successful sales based only on reporting on the corona virus that he saw on CNBC.
S1: That’s his argument. And we should say that this opened up interest in other lawmakers, too, and how they were dealing with their own stocks. But it seems like Burr’s case is different. And I wonder if you can articulate why.
S2: Well, there are a number of reasons why his transactions are more suspicious than some of the other names that we’ve heard put out there, like Senator Lefler of Georgia and Senator Feinstein of California. Those are two names of people who either themselves or their spouses made some interestingly timed transactions. But Senator Burr, I feel, remains a focus of investigators for a number of reasons. He had this enormous number of transactions on a single day. That volume of transactions was very unusual for him. He sold a lot of stocks up to two hundred fifty thousand dollars worth of stocks in the hospitality sector, which, as we know, has really been hit by the corona virus crisis. His private comments, this audio that you’ve mentioned that we had from that meeting with well-connected constituents show his state of mind that his personal view contradicted his public view. His personal and private view showed that he was deeply, deeply concerned about how bad the coronavirus crisis would become. And finally, he was personally behind the sales. His statement in response to some of this reporting was that he personally directed the sales. Senator Lefler, for example, has said that she used a third party and didn’t personally direct any of her stock sales. So if you look at the totality of those circumstances, you realize these circumstances are far more suspicious than the other the other circumstances that have been pointed to in all of this reporting.
S1: It seems strange to me that senators are even allowed to do this, because even if you’re not the chairman of the Senate Intelligence Committee, you are going to have information on a confidential basis, important information about the country. So I guess I feel like we’re setting these lawmakers up for failure by saying you can trade stocks and serve rather than, say, put your money in a trust or, you know, everything is executed by a third party. Why are senators even allowed to do this?
S2: It’s an interesting question. I mean, they’ve never been prohibited from doing so.
S5: But there is a groundswell of lawmakers proposing legislation now that prohibits personal stock transactions that some lawmakers are now coming around to the idea that lawmakers should not be allowed to make these individual stock transactions. Mutual funds. OK, ETF, fine, but individual stocks should individual stock trading should be prohibited by members of Congress.
S1: So let’s talk about where we are now. Senator Burr is no longer the head of the Senate Intelligence Committee for the time being. Can you talk about the significance of that?
S5: Well, Senator Burr has been a mainstay on the Senate Intelligence Committee. I mean, if you talk to Democrats on the Senate Intelligence Committee, you’ll you’ll find that many of them have a lot of respect for Senator Burr and that he’s worked in a generally bipartisan way when it comes to matters of intelligence. In fact, since the 2016 election and the kind of fallout in 2017, he’s been working across the aisle on a series of reports on Russian interference in the 2016 election. And afterwards, as chairman, Senator Burr has just not been super public, not particularly accessible to the press. But I think, generally speaking, as a chairman, a lot of folks have praise for the work he’s done.
S1: I was surprised to see this investigation move forward against a Republican senator. And maybe that’s just the cynic in me. But I’m curious if you can kind of tease out here the decision making, because there has been speculation that Senator Burr, he was among one of the more bipartisan senators. You mentioned how he was looking into Russian interference in the election. And I wonder if you think that speculation is fair.
S5: I think the answer to the question really depends on whether you think the Justice Department maintains its independence in the kind of BRX era. Right. What do you think? The attorney general is working as the attorney general of the United States or as President Trump’s attorney general? So do you think that the Justice Department has become hopelessly politicized and you might have a fair question to raise about whether or not Senator Burr was targeted here? Because you look at the history, those close to the Trump White House are not fans of Senator Burr, because if you’ll recall his. Part of the Russia investigation, Senator Burr helped approve a subpoena of Donald Trump Jr. to bring him before the committee. That was a surprising move by Senator Burr and really angered a lot of folks in the Trump orbit. If you think that the Justice Department maintains a level of independence here, you can look at the evidence and see that there’s a fair amount of evidence to suggest wrongdoing and at least enough evidence to investigate which has been happening.
S1: I wonder if you can talk a little bit about the differences you saw in how different news organizations handled the story know, because it looked really different if you went over or went over to Fox News vs., say, NPR.
S5: Well, I don’t think you can understate the influence of Fox News commentary in primetime. Right. And if you what was really remarkable to me during this period was how quickly Tucker Carlson, a very prominent Fox News host, turned on Senator Burr and targeted Senator Burr in particular on these issues of stock trades. And it really kind of set the tone for the conservative response to this scandal, which is. No one was lining up to defend Senator Burr at any point, and in fact, Tucker Carlson explicitly asked for Senator Byrd to resign, which is a remarkable demand from a Fox News host to a Republican, a sitting Republican senator. That was a very important moment. I think this set the tone for how folks on the right would respond to this.
S2: Then maybe there’s an honest explanation for what he did. If there is, he should share with the rest of us immediately. Otherwise, he must resign from the Senate and face prosecution for insider trading. And I guess no.
S1: Senator Burr’s defense could be. Well, the insider information I was getting as the intel chair wasn’t the hotel industry is going to tank. And yet he sold a lot of hospitalities stock.
S2: You don’t need to have specific information that says, you know, is going to go down. It just needs to be material and nonpublic. Meaning if you or I, as a stock buyer or stock seller, were to have that information, it would be meaningful to you or me. So if he received it, for example, I’m not saying that he did. But if he if he did receive this briefing that outlined the number of deaths or the number of cases of coronavirus that were to come in America, that would have been non-public information and it would have been material. And if he may transactions based on that information, then there is a real possibility he could be charged with insider trading.
S1: Tim Mak, thank you so much for joining me. They thought. Tim Mak is NPR’s Washington investigative correspondent. And that’s the show. What Next is produced by Mary Wilson, Jason de Leon and Daniel Hewitt. We are collecting your stories about what your new normal looks like. Give us a call. Tell us what it’s like where you are. You can reach us at two zero two eight eight eight two five eight eight. All right. Thanks for listening. I’m Mary Harris. I’ll talk to you tomorrow.