Greg Nash | AFP | Getty Images WASHINGTON – Newly declassified FBI documents paint a vivid picture of the government’s evidence in an insider investigation into the 2020 dealings of North Carolina’s senior senator, Republican Richard Burr. Burr was ultimately not charged with breaking any laws. But the newly released affidavit of an FBI special agent shows that the Justice Department had probable cause to believe that Burr had committed insider trading and securities fraud. As chairman of the Senate Intelligence Committee, Burr in February 2020 abruptly liquidated more than half of his and his wife’s holdings at a time when US markets and most Americans still didn’t know how bad the coronavirus pandemic would be. Given his position, Burr had information about the spread of the virus and America’s meager preparation for a massive pandemic that was not available to the public. The affidavit was filed in support of an application for a search warrant to seize and search Burr’s phone, an application that the judge in the case later granted. It presents an amazing timeline of calls and texts between Burr, his wife Brooke Burr, her brother Gerald Fauth and Fauth’s wife that took place on the same days that both the Fauths and the Burrs sold hundreds of thousands of dollars worth of stock, right before it sank the market. A spokesman for Burr’s Senate office did not respond to a request for comment on the newly unsealed documents.
An unusual schedule
From the beginning, Burr insisted that the only information he relied on when he decided to sell his shares was publicly available, including reports from CNBC correspondents in Asia. But as chairman of the Senate Intelligence Committee, Burr had access to classified intelligence reports in January and early February that contained dire warnings about the coronavirus. On January 31, Burr received non-public information from a source whose name appears in the FBI documents. That same day, Burr instructed to sell nearly $110,000 in stock from his and his wife’s brokerage accounts. On February 12, Burr ordered the purchase of approximately $1.2 million in Treasury securities, using 76% of the total holdings in Burr and his wife’s joint account. “Investors often buy US Treasury funds to hedge against a potential market downturn,” notes FBI Special Agent Brandon Merriman. He also noted that the Dow Jones Industrial Average closed at a record high of 29,551.42 on February 12. A day after Burr’s big T-bill purchase, Burr and his wife unloaded about $1.1 million worth of stocks. That Burrs sold shares was reported at the time, but the value of the sale was only reported within a range. Monday’s filing was the first time the exact amounts were made public. According to the FBI, “As a result of Senator Burr’s sales on February 13, 2020, his portfolio decreased from approximately 83% in stocks to approximately 3% in stocks.” A week later, markets began a sharp slide as investors panicked about the potential economic damage from the coronavirus.
Gerald Fauth
The other person in Burr’s family who sold a lot of stock on February 13, 2020 was Burr’s brother-in-law, Gerald Fauth. According to the affidavit, records show that a series of sell orders were placed in an account of Fauth’s wife, Mary Fauth, shortly before noon on the 13th, totaling approximately $159,100. Burr’s attorney, Alice Fisher, told ProPublica in May 2020 that Burr “did not coordinate his decision to trade on February 13 with Mr. Fauth.” But FBI records released Monday show that Burr’s wife called her brother shortly after 11 a.m. ET at 1 p.m., and they talked for two minutes. Twenty minutes after that, Burr also used his cell phone to call Fauth, according to records obtained by the Justice Department. Just two minutes after Fauth’s conversation with his brother ended, Fauth called his investment manager and they spoke for just half an hour. In a later interview, the adviser appears to have told the FBI that Fauth seemed in a hurry and that he mentioned he knew a senator in Washington. According to the FBI, Burrs’ orders to sell shares were made between 11:38 and 11:49 am. Fauth’s orders were given between 11:55 A.M. and 11:58 a.m
Mysterious text messages
While the FBI affidavit sheds light on many of the questions surrounding Burr’s stock sales, it closely guards at least one relevant piece of information: what kind of non-public information Burr had about the coronavirus and where he got it. But there may be some clues: Specifically, the Justice Department cites dozens of text messages Burr exchanged with someone whose name is redacted but appears to be a possible source of nonpublic information. According to the FBI, from January 31, 2020 to April 7, 2020, this individual and Burr “exchanged approximately 32 text messages, almost all of which related, in one way or another, to the COVID-19 pandemic.” . Almost everything about the text messages has been redacted, but later in the affidavit, the government writes, “these text messages include those discussed above and include other topics such as efforts to provide face masks to the public, the ‘global perspective on with COVID-19 and a proposed “national lockdown”. If Burr had received this information when it was not being discussed publicly, it could have strengthened the government’s case against him. It’s not yet clear why the Justice Department decided not to prosecute Burr or Fauth, and the department doesn’t typically explain why it doesn’t prosecute someone. But on January 19, 2021, nearly a year after the questionable transactions, Burr said in a statement: “Tonight, the Department of Justice informed me that it has completed its review of my personal financial transactions conducted early last year. “The case is closed now. I’m glad to hear that,” Burr said. “My focus has been and will continue to be working for the people of North Carolina at this difficult time for our nation.”
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