Insider trading trial closes with defense lawyer blasting a key witness

SANTA ANA -- An attorney defending an executive accused of insider trading assailed the credibility of a key witness during a multi-day closing argument that focused in part on a cooperation agreement brokered with the U.S. attorney's office last summer.

"Ladies and gentlemen, it should not take 16 meetings and teleconferences and conferences to decide on what the truth is," Richard Marmaro, a partner at Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, told jurors. He emphasized that prosecutors didn't meet their chief witness, Douglas DeCinces, convicted of insider trading last year, until long after meetings with his attorney commenced.

"What you saw during this trial was Mr. DeCinces singing for his supper, trying to get the maximum possible benefit at the expense of an innocent man," Marmaro said.

When DeCinces, a former Major League Baseball player, was convicted last year, the same jury hung 8-4 to convict his co-defendant, business executive James Mazzo, who is being tried a second time.

"Jim Mazzo's life has been turned into a nightmare, with prosecutors charging him with something he did not do and with his former friend suddenly making up a new story and a new memory to save his own skin," Marmaro said, "it's time to end this nightmare once and for all."

Jurors will begin deliberating Thursday.

An hour-and-half rebuttal from Assistant U.S. Attorney Stephen A. Cazares followed Marmaro's approximately five-hour argument, in which he sought to lay out his theory that DeCinces is actually innocent of insider trading, too.

Marmaro began Tuesday afternoon and walked jurors through evidence and testimony that he argued supports the defense theory that Mazzo never told DeCinces proprietary information about his company, Advanced Medical Optics. DeCinces bought 77,700 shares of Advanced stock at about $5 per share in the weeks before its was acquired by Abbott Laboratories in 2009 and the price soared to $22 per share. Several of his friends as well as his son bought Advanced stock at DeCinces' advice.

DeCinces testified that none of them knew he'd obtained insider information about Advanced from Mazzo. Some of the shares also went to accounts DeCinces created for his four grandchildren. Marmaro said both those facts show DeCinces knew the trades were legal when he made them. He also referenced testimony from DeCinces' broker, who said DeCinces agreed to purchase stock in several blocks over a day instead of all at once.

"He was looking for the best price, not the fastest trade," Marmaro said.

He emphasized testimony he elicited from DeCinces during cross examination about how his friends were wealthy people who didn't need the money they made from their Advanced purchases. He also noted that the $460,428 DeCinces spent on Advanced shares was only about 7 percent of his investment assets, which totaled more than $6.5 million.

"This is not the behavior of someone who had inside information. Rather it's the behavior of someone reading a situation and having a strong belief that something good was going to happen very soon," Marmaro said.

Marmaro reminded jurors that while DeCinces didn't tell his friends he bought stock based on insider information from Mazzo, he told each of them that longtime investor Dick Pickup was buying a lot of Advanced stock, too.

The defense lawyer focused a portion of his argument on Pickup, who lives near DeCinces and Mazzo in Laguna Beach and acknowledged in testimony that he's made more than $250 million in 50 years as an investor. DeCinces bought stock based on advice from Pickup, and he read Mazzo's behavior to gauge what was going on at Advanced, Marmaro said.

"Dick Pickup is not a figment of anyone's imagination. He actually exists, and he came into this court and told you what happened," Marmaro said. "But his narrative is inconvenient for the government."

Marmaro also noted that DeCinces received a copy of the prosecution's memo of his interview before he took the stand.

"The truth doesn't need to be studied. It is not an evolving concept," Marmaro said. "But he needed a cheat sheet, and he asked for it. And he got it."

He also reviewed the U.S. attorney's office's deal with DeCinces, which went from a five-year sentence to a two-year sentence to a recommendation of zero time behind bars. United States v. DeCinces et al., 12-CR00269 (C.D. Cal., filed Nov. 28, 2012).

"Anyone who changes his story in return for an enormous benefit is immediately suspect. That's common sense," Marmaro said. "When the amount of the benefit depends on how much your story helps the party offering the benefit, that is a powerful incentive to lie and to embellish to try to please the party offering the benefit."