US judge denies all post-trial motions in major insider trading case

SANTA ANA — A federal judge in Orange County has denied all post-trial motions in a major insider trading case, rejecting allegations of juror misconduct as inadequate while describing the accused jury as “diligent.”

The order from U.S. District Judge Andrew J. Guilford clears the way for a new trial for James V. Mazzo, a corporate executive who, by the votes of four jurors, avoided conviction on 26 felony counts in May.

Mazzo’s co-defendants, retired Major League Baseball player Douglas DeCinces and his friend David L. Parker, are to be sentenced after Mazzo’s trial, which is to begin Sept. 19.

Guilford’s brief ruling Tuesday said that though he’s “fully willing to consider any allegations of misconduct, counsel’s assertions and supporting declaration simply weren’t conclusive and didn’t establish that a juror, in fact, lied in district court, or that the suggested remedy was proper.”

The allegation was from DeCinces’ attorney Kenneth B. Julian at Manatt, Phelps & Phillips LLP and concerned a juror who was dismissed during deliberations after telling Guilford a family member was ill. A private investigator hired by Manatt concluded that wasn’t true.

The investigator, retired FBI agent Paul Bonin, also said in a declaration that another juror said they convicted DeCinces but not Mazzo because they believed DeCinces may have been tipped off to the sale of Mazzo’s company by someone other than Mazzo.

While Bonin’s declaration and Julian’s motion are sealed, each allegation was briefly discussed during oral arguments Monday. Guilford expressed skepticism then, saying he couldn’t be sure from the declaration that a juror indeed lied. He also dismissed Julian’s concern about the other juror saying they’d considered a tipster other than Mazzo.

“I have been surprised and impressed how jurors I have had in the past thought up different explanations for facts, which is different than coming up with new facts,” Guilford said.

Citing “the reasons given from the bench, among others,” Guilford’s order rejects Julian’s motion to set aside the verdict for jury irregularities and misconduct as well as his Rule 29 and Rule 33 motions, which were joined in by Parker’s attorneys, sole practitioners Jeffrey C. Tatch of Newport Beach and George B. Brunt of Idaho Falls, Idaho. The judge also rejected a Rule 29 motion from Mazzo’s lawyers, Richard Marmaro and Clifford M. Sloan of Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates. Jurors on May 12 split 8-4 in favor of convicting Mazzo of 26 felonies. Mazzo is vice chairman of Chapman University’s board of trustees.

Parker was convicted of three counts of tender offer fraud; DeCinces was convicted of 14 counts. The jury hung 8-4 in favor of convicting DeCinces on 16 counts of securities fraud and two other tender offer counts. United States v. DeCinces et al., 8:12-cr-00269 (C.D. Cal., filed Nov. 28, 2012).

Much of the post-trial litigation focused on the split verdicts. Sloan also argued that his client Mazzo, who wasn’t charged until two years after DeCinces, in September 2014, can’t be tried because a five-year statute of limitation applies, not the six-year statute that Guilford used. Mazzo was the last to take the stand in the two-month trial, which included 26 days of testimony from 28 witnesses, as well as 650 documents. He denied ever telling DeCinces about the pending sale of his company, Advanced Medical Optics, to Abbott Laboratories.

The sale occurred in January 2009; DeCinces bought shares in Advanced in the weeks before the sale that he sold immediately after for a $1.3 million profit. His friends and family made similar purchases that made them another $1.3 million.

The U.S. attorney’s office also presented evidence of prior, smaller trades DeCinces made that coincided with insider Advanced activity regarding IntraLase Corp. and then Bausch + Lomb.

The case was prosecuted by Stephen A. Cazares, Ivy A. Wang, Jennifer L. Waier and Lawrence E. Kope. Cazares, Wang and Waier handled all questioning, working to portray Mazzo as a starstruck baseball fan who told his new friend, DeCinces, proprietary information about his publicly traded company in exchange for friendship and status that included membership at the Big Canyon Country Club in Newport Beach.

Guilford has said the two-month trial was too long and discussed imposing limits on the length of a new trial and the number of exhibits allowed. The order issued Tuesday calls for Marmaro’s team and the U.S. attorney’s office to produce a single exhibit list “that includes only any previously admitted exhibits and 50 (or less) additional exhibits from each party.” Guilford will review proposed additional exhibits if they arise.

“Factors to be considered in such review will include why the voluminous documents admitted in the previous trial, plus over 20 percent more, is not sufficient,” the judge wrote. “Finally, to move the proceedings along, the court will encourage appropriate objections under Federal Rule of Evidence 403, discourage sidebar conferences, and generally prohibit speaking objections.”

The trial is to last no more than six weeks.