Ninth Circuit Calls Foul on Ballplayer’s Defense

(CN) - The Ninth Circuit threw a couple of strikes at a former major league baseball player and his business associate in their defense against insider-trading allegations.

Federal prosecutors indicted former ballplayer Doug DeCinces, along with former Advanced Medical Optics CEO James Mazzo, about a year ago on 41 counts of insider trading, tender-offer fraud, securities fraud and money laundering.

In an earlier indictment, prosecutors charged that DeCinces had used information from meetings and phone calls with Mazzo to trade Advanced Medical Optics shares when the firm was being courted for a takeover by Abbot Laboratories.

Mazzo allegedly tipped DeCinces off that Abbot planned to offer Advanced Medical Optics $21 to $23 per share. After Abbot acquired the firm in 2009, its shares, which traded under the symbol EYE, rose from $8 to $22.

Ahead of the buyout in late 2008, DeCinces had liquidated his stock portfolio at Merrill Lynch in late 2008 for an $80,000 loss, according to the indictment.

Prosecutors say the former third baseman used the $160,000 he had left over to buy 90,700 shares of EYE stock, from which he made $1.3 million profit.

Mazzo also whispered to DeCinces about the buyout of another medical supply company, IntraLase, of Irvine, according to the 2014 indictment.

As the case heads to trial in Los Angeles, a federal judge overseeing the case let DeCinces and Mazzo exclude certain pieces of evidence against them.

The Ninth Circuit reversed that order Tuesday in Pasadena.

"In particular, the evidence tends to support the government's allegations that DeCinces' and the other trading defendants' purchases of EYE stock were the product of a scheme to trade on nonpublic information obtained from EYE, not mere good luck," Judge Johnnie Rawlinson wrote for a three-judge panel. "The evidence is also relevant to showing the defendants' respective roles in the alleged scheme. Although the admission of the evidence may harm the defendants' case, that is not reason to exclude it under Rule 403, which refers only to unfair prejudice."

DeCinces and Mazzo also failed to show that the court lacked jurisdiction.

"Mazzo has not disputed his entitlement to a direct appeal should he be convicted of violations of both § 1348 and Rule 10b-5," Rawlinson wrote. "He argues, rather, that a direct appeal is insufficient because the Double Jeopardy Clause protects him against the trial itself. But that principle does not apply when, as here, the issue is whether multiplicitous punishment would be allowed for charges that - regardless of the double jeopardy claim - may be tried."

DeCinces is president and CEO of an Irvine-based real estate development firm. The 65-year-old Laguna Beach man started his career as a third baseman for the Baltimore Orioles in 1973, and ended his Major League Baseball career with the St. Louis Cardinals in 1987.

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