The case against a Laguna Beach man accused of providing insider-trading tips to former California Angels third baseman Doug DeCinces may be heading to a final resolution.
Attorneys for the Securities Exchange Commission and James V. Mazzo, 62, were in federal court Tuesday to discuss a resolution of that agency’s case against the defendant, which has been awaiting resolution of the criminal case against Mazzo. The criminal case has twice ended with deadlocked juries, and a third trial is scheduled for next year.
U.S. District Judge David O. Carter pressed the attorneys to tell him if there was a plan to dismiss criminal charges against Mazzo or if a plea bargain was in the works. Mazzo’s attorney, Richard Marmaro, said he had a letter from the U.S. Attorney’s Office that answers Carter’s question, but SEC attorneys did not want it revealed in open court.
Carter ordered the attorneys to return to court Thursday with a prosecutor on the criminal case to discuss whether the U.S. Attorney’s Office has any objection to the resolution of the SEC’s civil matter.
The criminal case is assigned to U.S. District Judge Andrew Guilford.
Carter noted that he and Guilford have been discussing the proposed settlement, but wanted to know what was happening with each side.
“Maybe I should have ordered the U.S. attorney to be present, but you’d think they would be smart enough to be here,” Carter said.
Carter was most concerned about a provision in the SEC agreement that he felt was vague when it came to how Mazzo’s future statements denying allegations against him in the criminal case could trigger the SEC voiding the settlement.
Carter said it was “meaningless” and “nonsensical.”
The judge added, “If this is a holistic settlement (of both cases) then tell me that.”
Carter demanded “pure transparency” at the next hearing so criminal and civil prosecutors are on board with the resolution of the SEC case.
“I think it’s going to work out, counsel,” Carter told Marmaro. “As long as there is complete transparency. Are you dumping this case? Are you plea bargaining? Are you going forward (with a third trial)?”
Mazzo has agreed to pay a $1.5 million fine for giving his friend and neighbor DeCinces a couple of tips when Mazzo was CEO of a eye care company.
In the first trial, DeCinces was convicted in May 2017 and Mazzo’s case ended with a hung jury. For the second trial, DeCinces agreed to testify for the prosecution against Mazzo, but a jury deadlocked again in February 10-2 for acquittal.
DeCinces is hoping for leniency in sentencing. He testified he was facing five years in federal prison, but said prosecutors agreed to request only two years behind bars in exchange for his help with prosecuting Mazzo.
DeCinces said he had been advised by a stock broker in 2008 to buy more stock in Mazzo’s company, Advanced Medical Optics Inc., because of a planned debt-restructuring that Mazzo had discussed that would save the company about $90 million.
DeCinces testified that he bought 3,500 shares in the company based on the broker’s advice, then talked to Mazzo about the restructuring plans, prompting him to buy more than 11,000 additional shares in the ensuing days.
Prosecutors contend that Mazzo tipped off DeCinces in January 2009 about the planned sale of Advanced Medical Optics to Abbott Laboratories. DeCinces said his stockbroker advised him to sell his shares, and he collected more than $1 million in profits.
Mazzo’s attorneys have denied that he gave DeCinces any tips about the eye care company, noting during DeCinces’ testimony that the former baseball player had repeatedly denied receiving any inside information from his former neighbor.
Marmaro argued in a brief filed last month that his client did not profit from the alleged tips to DeCinces. Marmaro also argued that the SEC has previously worked out settlements with DeCinces and former teammate Hall of Famer Eddie Murray as well as other defendants. DeCinces paid $1.1 million to settle the SEC case.
Mazzo believes he would “prevail” in a civil trial with the SEC, Marmaro said in the brief.
However, the attorney added, “there is considerable risk in proceeding, and considerable personal cost. Mr. Mazzo’s life has been turned upside down for the past decade. Mr. Mazzo lost a job and three public board memberships because of the legal proceedings against him, and has been unable to find work at a U.S. listed company since the criminal indictment.
“The stress of these proceedings has been enormous and unimaginable on Mr. Mazzo and his family.”
Marmaro said his client is a “two-time cancer survivor with other significant health issues,” and he wishes to “move on with his life.”