SANTA ANA, Calif. (CN) — Convicted of insider trading last year, baseball star Doug DeCinces on Thursday acknowledged that by not coming clean earlier he allowed a close friend to be wrongfully convicted and left three more friends to face federal charges he could have prevented.
DeCinces this week confessed to insider trading and testified against the former friend he says gave him the million-dollar stock tip, James V. Mazzo, former CEO of Advanced Medical Devices, who is being retried.
“I was in a dilemma at that point,” DeCinces told the jury about staying mum while longtime friend David L. Parker was tried and convicted of trading on confidential information DeCinces now says he never passed to him. “I had to protect myself … and others.”
A federal jury in May 2017 convicted DeCinces of 14 counts of insider trading based on his buying thousands of shares of Advanced Medical Optics in the days and weeks before the Santa Ana-based ophthalmology device maker was acquired by Abbott Laboratories in January 2009, for more than twice the amount the shares had been bringing.
That jury deadlocked and did not convict Mazzo, who was charged with telling DeCinces about the pending Abbott merger. But it did convict Parker, an Orange County investor DeCinces had known and worked with for years, of acting on the insider tip prosecutors said he must have received from the ballplayer.
The U.S. Attorney’s Office in Orange County has put Mazzo back on trial before U.S. District Judge Andrew J. Guilford on some of the same insider trading charges, plus four new counts of perjury.
DeCinces testified this week against Mazzo, a neighbor and former friend, under a cooperation agreement that could reduce the 67-year-old former third baseman’s potential prison sentence from about five years to two or even zero years.
The unusual spectacle has drawn court-watchers to Guilford’s courtroom, along with lawyers, reporters, law clerks and court personnel.
On the stand Wednesday, DeCinces said for the first time that he did buy thousands of shares of Advanced Medical in part because of tips from Mazzo. He said the CEO hinted at and then directly told him about the Abbott acquisition during three informal meetings in late November and December 2008 and early January 2009.
Mazzo, now the global ophthalmology president at Carl Zeiss Meditec, has denied DeCinces’ accusations.
Parker bought 26,000 shares of Advanced Medical in early January 2009, right after a phone call with DeCinces, which came a day after a key DeCinces meeting with Mazzo. That was enough for the first jury, which agreed with prosecutors that DeCinces must have passed Mazzo’s tip to Parker.
Under cross-examination Thursday by Mazzo’s defense attorney Richard Marmaro, with Skadden, Arps, Slate, Meagher & Flom, DeCinces said that while he did know about the Abbott deal, he never mentioned it to Parker. He said he recommended Advanced Medical because a highly successful stock-picker they both knew well, Richard Pickup, was investing heavily in the company.
“You knew you had not tipped Mr. Parker,” and that the charges against him by the U.S. attorney’s office and the Securities Exchange Commission were wrong, Marmaro said. DeCinces agreed.
“In fact, Mr. Parker went to trial and was convicted. But you knew that was false.”
“Yes, I did,” DeCinces responded.
“Did you do anything to exonerate your close friend?”
“I did nothing at that point because I felt we all had a chance to exercise our constitutional rights and fight the charges in court,” DeCinces said.
Parker’s trial attorney, Jeff Tatch, said he was unaware of DeCinces’ testimony and said he couldn’t comment on it. Parker’s lead attorney, George Brunt of Idaho, could not be reached Friday morning.
Marmaro also lambasted DeCinces about a few other friends to whom he recommended Advanced Medical stock, including baseball great Eddie Murray, who had to pay $358,000 to the SEC for his trades. Two other men were indicted along DeCinces and Parker but were able to work out a plea deal or get the charges dismissed, Marmaro said.
DeCinces said he never disclosed to any of them, or to anyone at all, what he claimed Mazzo had told him about Abbott. He said he kept that secret, as Mazzo had insisted he do.
When your friends were charged, Marmaro asked, did you do anything to help them?
“I did not do anything,” DeCinces said.
Marmaro raised concerns about DeCinces’ four grandchildren, saying the Advanced Medical stock DeCinces bought for accounts in their names could be forfeited.
“Would you agree with me that you put criminal trades in your grandchildren’s accounts?” Marmaro asked.
“Based on what I know now, yes. … I wasn’t thinking about that. I made the decision [to buy] based on what Jim [Mazzo] had told me the night before,” DeCinces said.
DeCinces made a profit of $1.3 million on Advanced Medical stock when Abbot announced on Jan. 12, 2009 that it was buying the company at $22.50 a share. The stock had been priced at just under $9.
Over more than a day of cross-examination late Wednesday and Thursday, Marmaro took DeCinces through the details of a number of his meetings and phone calls with Mazzo, Pickup, stockbrokers and others. Marmaro also probed him about his cooperation agreement with prosecutors and generally accused the millionaire ballplayer-turned-investor of making up a story in order to stay out of prison.
“Other than what you’re saying now, you have no proof of this alleged conversation,” he said, referring to the key December 2008 meeting.
DeCinces agreed that he did not.
Marmaro’s cross-examination drew out a few dicey legal issues, such as DeCinces’s saying that he and his attorneys had presented only “truthful evidence” in the first trial. Under questioning, however, he said his attorney Kenneth B. Julian, with Manatt, Phelps & Phillips, had made inaccurate statements during the trial.
“I can’t control everything my attorney said,” he said.
Julian has said he made arguments based solely on the evidence presented.
At another point, Marmaro tried to question DeCinces from a transcript of the previous trial concerning a letter Mazzo had received from the SEC after the Abbott announcement.
Assistant U.S. Attorney Jennifer L. Waier asked for a conference with the judge away from the jury, and when they came back, Judge Guilford said prosecutors could cross-examine Mazzo on the topic.
In her short redirect examination, Waier asked DeCinces about his obligations under his cooperation agreement with prosecutors.
“The single most important thing impressed upon me was that I must tell the truth, the whole truth and nothing but the truth,” he said.
The trial is expected to continue for several more weeks.