SEC settlement ends criminal case against CEO accused of providing insider-trading information to ex-Angels star Doug DeCinces

A former Orange County CEO accused of providing insider information to ex-Angel’s star Doug DeCinces has agreed to a more than $1 million settlement with the U.S. Securities and Exchange Commission, leading federal prosecutors to drop the criminal indictment he was facing.

After a pair of criminal trials ended in deadlocked juries, the civil settlement brings the long-running courtroom battle between James Mazzo and the government to an end.

Under the terms of the settlement, Mazzo will pay a $1.5 million civil penalty and will be barred from serving as an officer or director of a public company for five years.

Prosecutors and Mazzo’s attorneys late Thursday bounced between the Santa Ana courtrooms of U.S. District Judge Andrew Guilford, who approved the government’s request to drop the criminal charges, and U.S. District Judge David Carter, who approved the civil settlement.

“We felt if we could see a reasonable disposition in the SEC case, that would be preferable to a third (criminal) trial,” Assistant U.S. Attorney Jennifer Waier told Carter.

Mazzo, the ex-CEO of Santa Ana-based Advanced Medical Optics, was accused of providing insider information about the company’s pending merger with Abbot Laboratories, a larger medical company, to DeCinces, his Laguna Beach neighbor and former friend.

DeCinces was accused of using that non-public information to turn a more than $1 million dollar stock market profit for himself and another $1 million dollar profit for his friends and family.

The first criminal trial ended with DeCinces convicted of insider trading, but jurors deadlocked on the charges against Mazzo. A second trial ended with another mistrial.

DeCinces denied the charges for years. But after his conviction, he agreed to cooperate with the government and testify against Mazzo in the second trial.

During his testimony in the second trial, DeCinces said Mazzo tipped him to Advanced Medical Optic’s merger with Abbot Laboratories weeks before it became public. When the stock purchases became the focus of a New York Stock Exchange investigation, DeCinces said Mazzo angrily confronted him and ordered him to keep quiet.

Mazzo’s attorneys said DeCinces was changing his story to avoid a lengthy prison sentence. Sentencing for DeCinces has been delayed until after the criminal case against Mazzo ends, since DeCinces’ agreement with the U.S. Attorney’s Office is contingent on his assisting prosecutors.

DeCinces already settled the SEC case against him, prior to his criminal trial, agreeing to pay about $1.1 million. Among the others to settle an SEC case related to the alleged insider trading was baseball Hall of Famer Eddie Murray, a former teammate of DeCinces who was among those DeCinces was accused of giving the inside information.

While attempting to get the criminal charges against him dropped following the second mistrial, Mazzo’s attorneys had suggested the SEC civil case as an alternative for criminal prosecution. The third trial, which had been tentatively scheduled for June, had been delayed at the request of both prosecutors and Mazzo’s attorneys.

According to a court filing by an SEC attorney, Mazzo’s attorney contacted the commission’s staff in May, eventually leading to discussions involving a former district court judge who served as a private mediator.

Richard Marmaro, Mazzo’s attorney, declined to comment on the dropped charges and the settlement.

In a court filing, Marmaro wrote that while Mazzo “did not make a single cent” from the trades carried out by DeCinces and his friends and family, Mazzo is “paying the highest penalty of any defendant in this case.”

Marmaro wrote that while he believed Mazzo would have a strong chance of prevailing in a third trial, the case had dragged on for more than six years and Mazzo wanted to bring the “ordeal” to an end.

According to his attorney, the allegations turned Mazzo’s life “upside down,” resulting in his losing a job and his membership on three public board’s. Mazzo is also a two-time cancer survivor, his attorney wrote, and has “significant health issues.”

“Mr. Mazzo wants to bring the legal proceedings to an end and move on with his life,” Marmaro wrote.

Prosecutors declined to comment on what impact the settlement would have, if any, on sentencing for DeCinces.