SoCal CEO Charged With Inside Trading

SANTA ANA, Calif. (CN) – The former CEO of an Orange County medical supply firm was federally charged Wednesday with passing inside-trading tips to his friend, former professional baseball player Doug DeCinces.
     A 41-count superseding indictment added James Mazzo, 57, to charges accusing DeCinces and two other men with using nonpublic information to buy shares in Mazzo’s company, Advanced Medical Optics.
     DeCinces, 64, was charged in 2012 with using information from meetings and phone calls with Mazzo to trade shares in the firm when it was the subject of a proposed takeover by Abbot Laboratories.
     DeCinces allegedly bought shares after Mazzo tipped him off that Abbot planned to offer $21 to $23 per share in the company. After Abbot acquired the firm in 2009, shares in the medical supply company, which traded under the symbol EYE, rose from $8 to $22.
     Mazzo also is accused of telling DeCinces about a previous buyout of another medical supply company, IntraLase, of Irvine.
     “DeCinces allegedly used this inside information to purchase IntraLase stock, and to tip a friend to purchase shares, ahead of the announcement that Advanced Medical Optics was purchasing the company. IntraLase stock rose approximately 10 percent after the announcement of the deal,” the U.S. Attorney’s Office said Wednesday.
     Prosecutors say that in late 2008, DeCinces liquidated his stock portfolio at Merrill Lynch for an $80,000 loss and used the $160,000 he had left over to buy 90,700 shares of EYE stock, from which he made $1.3 million profit.
     DeCinces allegedly passed on Mazzo’s tip to five other people who bought stock in the medical supplier, including his friend and business partner David Parker, 62, of Provo, Utah, and real estate attorney and friend Fred Scott Jackson, 68, of Newport Beach, all of whom are named in the superseding indictment.
     Prosecutors claim DeCinces passed along the tip to make amends for a previous investment recommendation that had gone awry.
     Parker made $347,920 in profits in EYE, and Jackson made $140,259, according to the U.S. attorney.
     Mazzo, Parker and Jackson were charged with insider trading, tender offer fraud and securities fraud.
     DeCinces faces charges of insider trading, tender offer fraud, securities fraud and money laundering.
     If convicted, the defendants face up to 25 years on each count of securities fraud, up to 20 years for each count of insider trading and tender offer fraud, and up to 10 years in federal prison for each count of money laundering.
     DeCinces, of Laguna Beach, is president and CEO of an Irvine-based real estate development firm. He 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.
     DeCinces settled civil charges from the SEC for $2.5 million in fines, and gave up profits the IRS seized from the scheme, prosecutors said.
     Jackson also agreed to settle. Neither man admitted wrongdoing.
     Mazzo and Parker are to appear in Santa Ana Federal Court in 2015 to face the civil charges.

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