Doug DeCinces, the ex-Orioles player accused of insider trading on information he got from former Advanced Medical Optics CEO James Mazzo ahead of the company’s $2.8 billion acquisition by Abbott (NYSE:ABT), wants 19 charges dropped from his indictment.
Mazzo also allegedly tipped DeCinces to AMO’s 2007 buyout of IntraLase, federal prosecutors say. In 2012 they accused DeCinces of passing the inside information along to 3 of his friends to make up for bad investment advice he’d given them previously.
DeCinces agreed in 2011 to pony up $2.5 million (but admitted no guilt) to settle similar charges leveled by the SEC. Last month prosecutors also indicted Mazzo.
Last week DeCinces asked Judge Andrew Guilford of the U.S. District Court for Central California to dismiss 19 of the counts against him, arguing that the government can’t prove that he knew Mazzo would benefit personally from disclosing news of the AMO buyout.
"Mr. Mazzo denies providing insider information to Mr. DeCinces. Moreover, the government does not have a single witness who will testify that Mr. DeCinces told them about Abbott’s pending acquisition of AMO. The government’s case is largely based upon circumstances and timing," DeCinces argued in a court filing.
Furthermore, the indictment "does not allege that Mr. DeCinces was aware that Mazzo provided the alleged insider information in exchange for a personal benefit. Rather, it merely alleges that the defendants knew alleged insider information had been obtained and provided to Mr. DeCinces by Mazzo ‘in violation of a duty of trust and confidence owed by [Mazzo] to [AMO] and [AMO’s] shareholders,’" according to court documents.
"This is a fatal error in the indictment. In order to prove insider trading, the government must prove that the defendants had knowledge of Mazzo’s personal benefit," according to the documents. "Accordingly, to convict the defendants of insider trading, the government must prove that the defendants had ‘knowledge that such self-dealing occurred, for, without such a knowledge requirement’ the defendants would not ‘know if there has been an "improper" disclosure of inside information.’"
DeCinces has also asked Guilford to compel prosecutors to detail the information allegedly leaked by Mazzo.
"The government never identifies what material non-public information was conveyed to Mr. DeCinces, nor when the information was conveyed. Rather, the government merely alleges various types of Inside Information obtained by Mazzo that could have been conveyed to Mr. DeCinces on various dates, and that Mr. DeCinces traded in IntraLase and AMO stock during the relevant time periods," according to the documents [emphasis theirs]. "As a result, in a complex insider trading case – with allegations dating back 8 years, and spanning over 2 years – Mr. DeCinces is left to speculate what the government is accusing him of. Moreover, because of the lack of detail, there is a danger that the grand jury did the same. Mr. DeCinces therefore seeks an order from the court directing the government to file a bill of particulars identifying (1) the substance of the material non-public information the government is alleging was conveyed to Mr. DeCinces; and (2) when, in particular, the government is alleging such information was conveyed to Mr. DeCinces."
