SANTA ANA, California – A federal jury today convicted former professional baseball player Douglas DeCinces of insider trading charges for using non-public information to purchase stock in an Orange County company in transactions that netted him $1.3 million in profits.
A second man who illegally took the insider information from DeCinces – David Parker – was also found guilty today of violating federal securities laws.
The guilty verdicts follow a trial that lasted nearly two months in United States District Court.
As a result of the guilty verdicts, DeCinces, 66, of Laguna Beach, and Parker, 65, of Provo, Utah, respectively face statutory maximum penalties of 220 years and 60 years in federal prison.
United States District Judge Andrew J. Guilford will schedule a status conference in the coming weeks to discuss future proceedings in the case, including sentencing hearings.
At trial, prosecutors argued that DeCinces obtained the insider information from James V. Mazzo, 60, a neighbor of DeCinces in Laguna Beach, who was the CEO of the Santa Ana-based Advanced Medical Optics, Inc. Mazzo is accused of telling DeCinces that his company was going to be acquired by Abbott Laboratories. The jury that convicted DeCinces and Parker was unable to reach a unanimous verdict on the charges against Mazzo, and Judge Guilford declared mistrial on these charges.
Mazzo allegedly provided DeCinces with confidential information in advance of Abbott's January 2009 acquisition of Advanced Medical Optics (NYSE: EYE). DeCinces and his associates, including Parker, used the non-public information to purchase shares of EYE, which increased from approximately $8 to $22 as a result of the acquisition.
The evidence presented at trial showed that DeCinces liquidated his diverse stock portfolio of investments at Merrill Lynch – suffering approximately $80,000 in losses – to obtain approximately $160,000 that he used to purchase EYE stock. DeCinces ultimately purchased a total of 90,700 shares of EYE stock, which he sold soon after Abbott's tender offer for the company was publicly announced, and realized approximately $1.3 million in profits.
DeCinces gave information on the acquisition of EYE to Parker. After purchasing EYE shares and selling them following the acquisition, Parker realized illegal profits of nearly $350,000.
The jury found DeCinces guilty of 14 counts of insider trading. The jury was unable to reach a unanimous verdict on 18 additional counts of insider trading. Judge Guilford declared a mistrial on the unresolved charges.
Parker was convicted of three counts of insider trading in the context of a tender offer.
As a result of the mistrial, Mazzo still faces 13 counts of insider trading, and another 13 counts of insider trading in the context of a tender offer.
The investigation in this case was conducted by the Federal Bureau of Investigation and IRS Criminal Investigation. The Securities and Exchange Commission provided assistance during the investigation.
This case is being prosecuted by Assistant United States Attorney Stephen Cazares of the Major Frauds Section, as well as Assistant United States Attorneys Jennifer L. Waier, Ivy A. Wang and Lawrence E. Kole of the Santa Ana Branch Office.
Component(s): USAO – California, Central
Press Release Number: 17-101 Updated May 12, 2017
Central District of California DOJ / 17-101 / May 12, 2017