SANTA ANA, Calif. (CN) — A federal jury convicted former Orioles and Angels third baseman Doug DeCinces of 14 counts of insider trading Friday for raking in a $1.3-million profit based on illegal tips.
Prosecutors say DeCinces made stock purchases based on information from James V. Mazzo, the former head of medical device company Advanced Medical Optics and DeCinces’ friend and neighbor in Laguna Beach. The jury deadlocked on all counts against Mazzo, as well as another 18 counts against DeCinces.
“Obviously, this is a disappointment for everyone involved, and we don’t believe this is the end,” DeCinces’ attorney, Kenneth B. Julian of Manatt Phelps & Phillips, said after the verdict.
Asked how 12 jurors could convict DeCinces of trading on confidential corporate information while some of them found that the man who allegedly gave him the information was not guilty, Julian said, “That is a fantastic question.”
Jurors also convicted David L. Parker, an investor and friend of DeCinces, of three counts of insider trading for acting on tips he received from the ballplayer.
Parker’s attorney, Newport Beach solo practitioner Jeff Tatch, and Mazzo’s attorney, Richard Marmaro of Skadden, Arps, Slate, Meagher & Flom in Los Angeles, both declined to comment on the verdicts.
Federal prosecutors claim Mazzo told DeCinces in late 2008 that Abbot Laboratories was considering buying out Advanced Medical Optics for about $20 a share, even though the Santa Ana-based LASIK device company’s stock was selling for about $5 to $8 at the time.
DeCinces spent about $600,000 to purchase over 90,000 shares of Advanced Medical Optics from October that year through early January 2009. After Abbott announced it was acquiring Advanced on Jan. 12, the share price shot up from less than $9 to $22.
Prosecutors said DeCinces also tipped family members and friends, including Parker, to the impending merger. All told, they made another $1.3 million in profits on the insider information, prosecutors said. Parker gained a little under $350,000, according to the government.
None of the jurors were available for interviews Friday to discuss their findings or to explain why some of them voted to convict DeCinces but acquit Mazzo.
One factor that might have influenced the verdict was an apparent mistake by the defense team in preparing exhibits for the jury. According to a story in the local legal-affairs newspaper, one exhibit included a reference to a civil settlement between a friend of DeCinces and the Securities and Exchange Commission.
The exhibit mentioned that the SEC was also targeting DeCinces, according to the newspaper, citing a motion for a mistrial by the defense. The ballplayer paid $2.5 million in fines and penalties to settle the SEC matter in August 2011.
Over the course of the trial, the prosecution team — Assistant U.S. Attorneys Stephen Cazares, Jennifer Waier and Ivy Wang — said that Mazzo told DeCinces about the sale to Abbott in hopes the famous homerun hitter could help him become a member of the exclusive Newport Beach Big Canyon Country Club.
They also said that Mazzo had given DeCinces insider tips previously, when Advanced purchased a smaller laser surgery company and when it tried to buy Bausch & Lomb.
In an unusual move, Mazzo took the stand during the trial to insist that he did not pass any material, non-public information to DeCinces.
Defense attorneys argued that DeCinces bought Advanced Medical stock on the advice of skilled investor and golfing buddy, Dick Pickup. They said DeCinces’ friends may have learned of the potential merger from a stockbroker whose relative worked for the company.
In closing arguments for Mazzo, Marmaro had told jurors that they could not convict the former CEO unless they found he had “fraudulent intent” in giving DeCinces information about the Abbott acquisition.
Jurors received the case at the end of the day on May 3 following seven weeks of trial, but apparently spent only about four days in deliberations, according to observers.
Eight jurors voted guilty and four not guilty on each of the deadlocked counts, according to the jury foreperson’s report to U.S. District Judge Andrew Guilford.
Julian told Guilford that he expects to file a motion for a new trial and perhaps other post-trial motions in the next 30 days.