Former Advanced Medical Optics CEO James Mazzo wants a federal judge to dismiss his retrial on insider trading charges after the first round ended in a mistrial, alleging prosecutorial misconduct.
Federal prosecutors argue that Mazzo can’t prove any of his allegations, according to documents filed with the U.S. District Court for Central California.
The feds in 2014 accused Mazzo of tipping a close friend and neighbor, former Orioles player Doug DeCinces, about Abbott‘s (NYSE:ABT) pending $2.8 billion acquisition of Advanced Medical Optics (Abbott sold the business to Johnson & Johnson (NYSE:JNJ) for $4.33 billion earlier this year). DeCinces allegedly passed that information on to former teammate Eddie Murray, who later agreed to settle his case for $358,000 but admitted no wrongdoing; DeCinces agreed in 2011 to pony up $2.5 million (but admitted no guilt) to settle similar charges leveled by the SEC.
Judge Andrew Guilford of the Central California court in May declared a mistrial in Mazzo’s case after a jury deadlocked over the charges against him. But that jury also convicted DeCinces and a business associate on charges of tender offer fraud, despite deadlocking on other charges against DeCinces and all of the charges against Mazzo.
Mazzo, now global ophthalmology president at Carl Zeiss Meditec (ETR:AFX) after a 3-year run as president and CEO at AcuFocus, had argued that there is “no evidence” of him “lying, cheating, or hiding anything.”
In court filings earlier this month, Mazzo further alleged prosecutorial misconduct, alleging that the feds only decided to go after him when he testified in the SEC case that he intended to testify on DeCinces’ behalf.
“Throughout the government’s investigation and prosecution of Mr. Mazzo, federal agents and prosecutors have engaged in a pattern of misconduct and disregard for the legal and ethical duties inherent in a federal prosecution,” according to Mazzo’s motion to dismiss, which noted that prosecutors waited six years to indict him.
“This bizarre timing is explained, however, by Mr. Mazzo’s forthright statement, in a court filing in the civil SEC case, that he intended to be a defense witness for Mr. DeCinces in this case. The government’s prosecution of Mr. Mazzo was – and is – a textbook case of prosecutorial vindictiveness, an exercise in retaliation against Mr. Mazzo based on his willingness to testify in a manner that the government opposed. This abuse of the government’s charging authority alone requires dismissal of the charges against Mr. Mazzo,” according to the filing.
Mazzo also accused prosectors of making “false statements and misrepresentations” to a grand jury about evidence purported to link him to the alleged insider trades.
“In the government’s zeal to indict a prominent corporate official and community leader, it layered its unsupported assumptions onto the evidence and then falsely represented that distorted information to the grand jury as establishing what the government asserted. The government did so even when other evidence in its possession flatly disproved its representations,” Mazzo alleged.
“This misconduct should not be tolerated by this court, or permitted to go unaddressed. The government has put Mr. Mazzo’s liberty at risk vindictively, to punish him for his willingness to testify for the defense and further engaged in misconduct which deprived Mr. Mazzo of his constitutional right to have his indictment evaluated by an independent grand jury,” he alleged. “The numerous false statements presented to the grand jury in this case, which go to the heart of the government’s flimsy presentation against Mr. Mazzo, raise, at the very least, grave doubts about whether Mr. Mazzo would have been indicted absent the government’s misconduct. Under these circumstances, dismissal of all charges against Mr. Mazzo is necessary and is the only appropriate remedy for the government’s misconduct.”
Prosecutors countered that Mazzo waived any claims of vindictive prosecution and misconduct when he failed to raise them before the first trial.
“Second, even if not waived, the vindictive prosecution and grand jury misconduct claims are unsupported by the evidence and can also be rejected on the merits,” they argued, according to court documents. “Lastly, defendant’s claims of misconduct before the trial jury in support of his motion to dismiss are trivial and fail to identify anything similar to the ‘egregious’ and ‘flagrant’ misconduct and demonstrable substantial prejudice necessary to warrant dismissal.”
A hearing in the case is slated for next month.