Second trial of OC businessman ends in hung jury

SANTA ANA -- A judge declared a mistrial Wednesday in the second trial of a corporate executive accused of insider trading after jurors said they were deadlocked in favor of acquittal.

It's the second hung jury in two trials for James Mazzo, a longtime leader in the ophthalmology industry who is accused of telling his friend, former baseball player Doug DeCinces, confidential information about the acquisition of his company, Advanced Medical Optics, by Abbot Laboratories in 2009.

A federal jury last May convicted DeCinces of 14 counts of felony tender offer fraud but split 8-4 in favor of convicting Mazzo, following a two-month trial.

Jurors in the second trial, which lasted five weeks, apparently saw the case differently. They split 10-2 in favor of acquitting Mazzo on eight counts of securities fraud and eight counts of tender offer fraud, as well as three counts of perjury for his testimony in the first trial. They also split 9-3 in favor of acquittal on a single, broader perjury charge. They deliberated for three and a half days after two days of closing arguments last week.

Mazzo's wife, who attended every day of the trial, wept as the clerk read the jury's vote on each charge. Civil litigator Jeffrey H. Reeves, now a partner with Theodora Oringher PC and a friend of Mazzo, hugged him outside the courtroom.

Assistant U.S. attorney Stephen A. Cazares, who prosecuted Mazzo with Assistant U.S. Attorney Jennifer L. Waier, said afterward, "All you can do is respect the system. It's their decision."

Mazzo's lead trial lawyer, Richard Marmaro of Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, said his team is "gratified by the result."

"We appreciate the jury's conscientious service, and we continue to believe in Jim Mazzo's innocence," Marmaro said in an email.

Skadden partner Clifford M. Sloan of Washington, D.C., former associate White House counsel to President Bill Clinton, handled law and motion and appeals for the defense. Their team included Jeffrey Steinfeld, as well as Kevin D. Lloyd, Kate E. Mangels, Erica Shef, Matthew E. Sloan and Matthew J. Tako from Skadden's Los Angeles office, and Michael A. McIntosh and Brendan B. Gants from Washington, D.C. United States v. DeCinces et al., 8:12-cr-00269 (C.D. Cal., filed Nov. 28, 2012).

Prosecutors had not said as of late Wednesday whether they planned to retry Mazzo, who still is charged with 20 felonies. Cazares and Waier spoke with some of the jurors afterward, one of whom told Cazares that the testimony of renowned investor and defense witness Dick Pickup was "very influential."

Pickup lives in the same Laguna Beach neighborhood as Mazzo and DeCinces. He testified that he told DeCinces he was buying Advanced stock and suspected a lucrative refinancing deal might be looming. Prosecutors tried to show jurors that DeCinces' trades didn't completely coincide with Pickup.

DeCinces also made huge purchases that Cazares and Waier argued indicated confidence in a pending deal, such as liquidating a diverse stock portfolio at a loss so he could have more money for Advanced stock. In total, DeCinces bought 71,700 shares at about $5 a share.

The Advanced stock price soared to $22 after the Abbott deal closed, and DeCinces sold his stock for $1.3 million in profit. His friends made an additional $1.3 million.

Marmaro, however, noted the amount of the purchases indicated they were being cautious, which he said supports the defense theory that DeCinces didn't know the deal was a sure thing, rather, he read Mazzo's behavior and gauged that a possibly lucrative deal was looming.

DeCinces was the prosecution's key witness after he agreed to cooperate in exchange for a sentencing recommendation that could see him serve no time behind bars. Marmaro worked to portray DeCinces as a liar who was innocent but made up a story about his former friend to save his own skin after he was wrongfully convicted.

Marmaro also worked to establish Mazzo's reputation as an ethical leader and dedicated philanthropist who is widely respected in Orange County. Defense witnesses included close friends and colleagues such as David Pyott, former CEO of Botox-maker Allergan, where Mazzo worked his way from sales representative to executive before Advanced became its own company in 2003. Chapman University President Emeritus James Doti also testified. Mazzo is a vice chairman of Chapman's board of trustees.

Both men took the stand, with DeCinces recounting how Mazzo first told him about a possible lucrative deal involving his company, Advanced Medical Optics, during a car ride to an Anaheim Ducks hockey game in December 2008. He said Mazzo then told him during a later conversation that a sale was brewing, and while the deals are difficult and usually don't finalize, this one should be by the end of the year. DeCinces said he bought stock based on the conversations, then bought more in January after Mazzo canceled a golf game with him, because he presumed that meant he was busy finalizing the sale. Their last conversation occurred in the parking lot of the elite Big Canyon Country Club in Newport Beach, DeCinces said, testifying that Mazzo told him, "This is a once in a lifetime opportunity" and mouthed the words, "Buy more."

Before U.S. District Judge Andrew J. Guilford declared a mistrial, Waier requested that jurors be told to continue deliberations or be read an Allen instruction pursuant to Allen v. United States, 164 U.S. 492 (1896), which allows supplemental jury instructions to encourage jurors to break deadlock.

Sloan said the jury's note about being "hopelessly" deadlocked was a "very clear and explicit statement" and that a mistrial should be declared.

"The jury could not be clearer in their note," Sloan said.