A Santa Ana businessman was indicted Wednesday for allegedly taking part in an insider-trading scheme in which former Angels infielder Doug DeCinces was previously implicated.
DeCinces was originally indicted in November 2012, but a superseding federal indictment was handed down today that included a new co-defendant, James V. Mazzo, who was the CEO of Santa Ana-based Advanced Medical Optics Inc.
The 64-year-old DeCinces, of Laguna Beach, is president and chief executive of an Irvine-based real estate development firm and pleaded not guilty to the insider-trading charges in January 2013. In addition to the Angels, DeCinces also played third base for the Baltimore Orioles and St. Louis Cardinals in the 1970s and early 1980s.
According to the superseding indictment, Mazzo, 57, of Laguna Beach, allegedly provided the former Major League Baseball player with confidential information before Abbot Laboratories’ 2009 takeover of Advanced Medical Optics.
The indictment also alleges Mazzo gave DeCinces inside information in 2007 on Advanced Medical Optics’ acquisition of IntraLase Corp., an Irvine- based medical device company.
DeCinces is accused of using the inside information to acquire IntraLase stock and to tip a friend to pick up shares before the deal was announced. The company’s stock got a 10 percent boost after the deal was announced, Thom Mrozek of the U.S. Attorney’s Office said.
Also named in the indictment were:
— David Parker, 62, of Provo, Utah, a friend and business partner of DeCinces; and
— Fred Scott Jackson, 68, of Newport Beach, another friend of DeCinces, who was a real estate attorney.
Another DeCinces friend, Roger Wittenbach of Lutherville-Timonium of Maryland, was named in the original indictment in 2012, but the case against him was dismissed in April of last year.
Mazzo allegedly obtained inside information that Abbot was prepared to pay $21 to $23 a share of Advanced Medical Optics’ stock, which was trading at $8 per share, Mrozek said. Mazzo passed on the tip to DeCinces, who in December 2008 liquidated his stock to raise $160,000 to buy Advanced Medical stock, which he turned around and sold for a $1.3 million profit, the indictment alleges.
DeCinces allegedly passed along the tip to Parker and Jackson. Prosecutors contend he gave them the inside information because he had previously given them investment tips that soured.
Parker’s alleged profit was $347,920 and Jackson made $140,259, Mrozek said.
DeCinces has settled a Securities and Exchange Commission case against him without admitting guilt, Mrozek said. DeCinces agreed to pay $2.5 million in fines and will not contest the IRS’ seizure of profits, according to Mrozek. Jackson has also settled with the SEC, agreeing to return his profits and pay a penalty.
DeCinces’ attorney, Ken Julian, denied the allegations.
“The allegations in the indictment are false and we look forward to the truth coming out at trial,” Julian said.
Mazzo’s attorney, Richard Marmaro, said in a written statement that the government is ignoring evidence showing Mazzo did not engage in insider trading.
“Instead, the government claims that, for no apparent reason, he decided to give one friend nonpublic information about a corporate deal,” Marmaro said. “The truth is that Mr. Mazzo never disclosed material, non-public information to Mr. DeCinces trading advantage to a friend, not for any reason.”
Attorney Craig Wilke, who represents Jackson, declined comment.
— Staff and Wire Reports