Prominent OC investor testifies in insider trading case

SANTA ANA — A veteran businessman testified Thursday that he believes a key prosecution witness in an insider trading case took advantage of his trust by disclosing his strategies to his friends.

Multimillionaire investor Richard “Dick” Pickup’s testimony about his relationship with retired Major League Baseball player Doug DeCinces somewhat supported the defense theory that DeCinces used his friendship with defendant James Mazzo, to gain insight into Mazzo’s company Advanced Medical Optics.

“Do you believe that Mr. DeCinces took advantage of your trust by telling his friends about what you were purchasing?” asked Mazzo’s lawyer Richard Marmaro, a partner at Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates.

“Yes,” Pickup answered.

Pickup didn’t fully corroborate the theory and instead said under cross examination that he couldn’t tell from Mazzo’s behavior what was happening with his company, which is what Marmaro is arguing DeCinces did.

Pickup acknowledged he didn’t know Mazzo had told DeCinces he was considering leaving the company, and that was he was surprised when Abbott Laboratories acquired Advanced in January 2009. He testifed that DeCinces’ stock purchases in Mazzo’s company didn’t match his own investment strategy. While DeCinces and his friends sold their stocks just after the acquisition, profiting $2.6 million, Pickup held on to his.

“You didn’t sell your stock right away because you thought there was more money possible to be made, right?” asked assistant U.S. attorney Stephen A. Cazares.

“Correct,” Pickup answered.

“But you didn’t tell Doug DeCinces to hold his stock, did you?” Cazares asked.

“I didn’t tell Doug DeCinces anything,” Pickup answered.

“No further questions, your honor,” Cazares told U.S. District Judge Andrew J. Guilford.

Pickup’s testimony highlighted the 11th day of Mazzo’s second trial. A jury last May convicted DeCinces of 14 counts of tender offer fraud and convicted co-defendant David L. Parker of three counts, but they hung 8-4 in favor of convicting Mazzo.

DeCinces agreed to testify in exchange for the possibility of no prison time, and prosecutors secured a new indictment that includes four counts of perjury for Mazzo’s testimony in the last trial. Cazares and assistant U.S. attorney Jennifer L. Waier rested their case Tuesday; Marmaro is expected to rest by next Friday.

Thursday’s testimony cast an unwanted spotlight on the 84-year-old Pickup, who reluctantly acknowledged he’s made more than $250 million from his investments and whom attorneys describe as the Warren Buffett of Orange County. He, Mazzo and DeCinces live in Laguna Beach’s gated Irvine Cove neighborhood, which includes a secluded beach where Pickup relaxes with stock reports. He agreed with Marmaro that he’s a private person and doesn’t enjoy discussing his wealth or his investments.

“You’ve obviously been enormously successful in the stock-picking arena. Did you ever go on TV or write newsletters or in any way broadcast your philosophy or your success?” Marmaro asked.

“No,” Pickup answered.

“Was that intentional?” Marmaro asked.

“Yes,” Pickup answered.

The exchange set the foundation for Marmaro’s focus on Pickup’s ruined relationship with DeCinces. The men had known each other for years and invested in several projects, including the Strawberry Farms golf course in Irvine.

“When you talked to Doug DeCinces about your stock recommendations during the period in question, was he a good friend of yours?” Marmaro asked.

“Yes,” Pickup answered.

“Did you expect that he would keep the information to himself and just form his own investment decisions thereby?” Marmaro asked.

“Yes,” Pickup answered.

“Were you aware that Mr. DeCinces in early January 2009 told Mr. Parker that you were buying a ton of AMO stock?”

“I was not aware,” Pickup answered.

“And how does that make you feel to learn that?” Marmaro asked.

“Disappointed,” Pickup answered, then confirmed their friendship ended because of it.

Pickup’s testimony followed testimony from David Pyott, the former CEO of Botox-maker Allergan, Inc. Mazzo was a veteran Allergan executive before Advanced Medical Optics spun off from it and he became its CEO. Pyott said they’re close person friends, which he said is rare.

“I don’t generally like mixing business and social,” Pyott said.

Mazzo’s close friend Jon Wampler, a health care executive, testified after Pickup. He offered similar testimony to Pyott, though he picked a phrase to describe Mazzo’s honesty that inadvertently referenced the nature of the charges.

“If Jim Mazzo told me something, I would take it to the bank,” Wampler said.