STAFF REPORTS
Santa Ana – On Sept. 24, a federal grand jury indicted the former Chief Executive Officer of an Orange County medical device and eye care company on insider trading charges.
James V. Mazzo, who was the CEO of the Santa Ana-based Advanced Medical Optics, Inc., which was traded on the New York Stock Exchange under the symbol EYE, was added to an indictment that had previously named former professional baseball player Douglas DeCinces and two of his associates.
According to the United States Attorney’s Office, the case, which was initially filed in 2012, alleges that Mazzo was the source of non-public information that DeCinces and his associates used to trade EYE stock in the midst of a takeover bid by Abbot Laboratories.
The 41-count superseding indictment filed on Sept. 24 in United States District Court charges Mazzo with providing DeCinces with confidential information in advance of Abbott’s 2009 acquisition of Advanced Medical Optics. DeCinces and his associates allegedly used the non-public information to purchase shares of EYE, which increased from approximately $8 to $22 as a result of the acquisition.
The indictment further alleges that Mazzo previously provided DeCinces with inside information in relation to Advanced Medical Optics’ 2007 acquisition of an Irvine medical device company, IntraLase Corp. (NASDAQ: ILSE). 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 ten percent after the announcement of the deal.
The superseding indictment names Douglas V. DeCinces, 64, of Laguna Beach, who currently is the president and CEO of a real estate development firm in Irvine; David Parker, 62, of Provo, Utah, who was a friend and business partner of DeCinces; and Fred Scott Jackson, 68, of Newport Beach, a real estate attorney who was friends with DeCinces.
The four defendants indicted in this case will be summoned to appear for arraignments in United States District Court in Santa Ana.
The indictment charges Mazzo with 13 counts of insider trading, 13 counts of tender offer fraud and one count of securities fraud.
DeCinces is charged with 19 counts of insider trading, 19 counts of tender offer fraud, one count of securities fraud and one count of money laundering.
Parker and Jackson are each charged with three counts of insider trading, three counts of tender offer fraud, and one count of securities fraud. Parker additionally faces one count of money laundering and criminal forfeiture.
The securities fraud count carries a maximum statutory sentence of 25 years in federal prison. Each of the insider trading and tender offer fraud counts in the indictment carry a maximum statutory sentence of 20 years. The money laundering counts each carry a maximum penalty of 10 years.
DeCinces reportedly settled the case without admitting or denying the allegations, agreeing to pay $2.5 million in fines and not contest the IRS’ seizure of what were alleged to be insider trading profits. Jackson, without admitting or denying the allegations in the lawsuit also settled with the Securities and Exchange Commission, returning his profits and paying a penalty. A trial for Mazzo and Parker is scheduled for August 2015 in United States District Court in Santa Ana.
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.
