No Prison Time for Inside Trader Doug DeCinces

SANTA ANA, Calif. (CN) — Doug DeCinces, the former Major League Baseball star convicted two years ago of making a $1 million profit from insider stock trading, must spend eight months on home confinement but will serve no time in prison, a federal judge declared Monday.

Doug DeCinces in 1986

U.S. District Judge Andrew J. Guilford decided that even though DeCinces committed “a seven-figure felony,” the former Baltimore Orioles and California Angels hitter should serve no time in prison because he cooperated with prosecutors to testify against the business executive who allegedly gave him the illegal stock tip.

Guilford adopted prosecutors’ recommended sentence of one day in custody, which DeCinces served when arrested, plus two years of supervised probation, including eight months confined to his home. He also must pay a $10,000 fine.

Defense attorney Kenneth Julian said DeCinces, 68, will be able to go to work and to his medical appointments while on home confinement. DeCinces lives in Newport Beach and is a successful real estate developer and philanthropist.

In a statement to the court during the hourlong sentencing hearing, DeCinces accepted responsibility for what he had done. “At the time, I knew what I did was wrong,” he said. “I beat myself up more times than you can imagine. … For 10 years this has been a nightmare for me and my family.

“I ask for leniency for the past and to allow me to go forward with my life,” he said.

However, Guilford said he had seriously considered sending the defendant to prison for a time. He said he wondered if DeCinces “should incur the humility of serving time in prison.”

He decided against prison time because he was impressed by DeCinces’ sincerity and by statements from two character witnesses, including former Angels star infielder Rod Carew.

“I want you to know it was close,” the judge added.

Federal prosecutors charged DeCinces in November 2012 with insider trading for using nonpublic information allegedly given him by James Mazzo, the CEO of Advanced Medical Optics, about the company’s pending acquisition.

DeCinces made as much as $1.3 million from trades in the company, which was acquired by Abbott Labs in 2009, whereupon its share price shot up from about $9 to $22. Prosecutors said DeCinces passed on the insider tips to several friends and family members, who made another $1 million from illegal trades.

In May 2017, after a two-month trial, a jury convicted DeCinces of 14 counts of insider trading. It also convicted David L. Parker, DeCinces’ friend and business partner, of three counts of trading on insider tips from the ballplayer.

The jury deadlocked on all charges against Mazzo, who had allegedly given the tips to DeCinces.

Assistant U.S. Attorneys Stephen Cazares, Jennifer Waier and Ivy Wang put Mazzo on trial again in January 2018, but this time DeCinces — who had previously denied any illicit stock trading — admitted the crime and testified at length against his old friend. He detailed several occasions, including a dinner and visits at their homes, during which he said Mazzo urged him to buy stock in Advanced Medical Optics in late 2008, just before the Abbot acquisition.

Mazzo’s defense team, led by Richard Marmaro of Skadden, Arps, Slate, Meagher & Flom, disputed the accounts and cited their client’s sterling reputation and good works in the Orange County community. They argued that none of Mazzo’s family members or other, closer friends traded in the company’s stock.

The new jury again deadlocked, voting 10 to 2 in favor of acquittal.

Prosecutors moved to try Mazzo a third time, but after he agreed to pay $1.5 million in a civil settlement with the Securities and Exchange Commission, they agreed to drop all charges against the executive in December last year.

DeCinces settled with the SEC in 2011 for $2.5 million.

In discussions with prosecutors before Mazzo’s second trial and on the stand, DeCinces said he did not rely on the alleged tips from Mazzo when he urged Parker to buy AMO stock. As a result, the U.S. attorney’s office dismissed all charges against Parker in May this year.

In Monday’s hearing, Guilford said one factor in DeCinces’ no-prison sentence was that Mazzo was not convicted of insider trading. He noted that between the two juries, 13 jurors voted that Mazzo was not guilty and 11 voted he was.

“What does that say about beyond a reasonable doubt?” the judge asked.

Paraphrasing a comment in one of the letters submitted in support of DeCinces, Guilford said he considered insider trading a serious offense. “But I consider it a nuanced offense that it’s hard to get your arms around.”

He also said he was impressed not only with what Carew said in court, but with the 53 letters from friends, family members, charities and business and baseball colleagues that defense attorney Julian, from Manatt, Phelps & Phillips, presented in support of DeCinces.

“I’ve never seen a packet of letters like this,” the judge said. “No one has this kind of support from the community. Many of them are folks I know and admire.

“You’re a good man who made a mistake,” Guilford told DeCinces at the end of the hearing. “I want you to put the mistake behind you.”

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