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Justice Department lawyers said this week they plan to try medical-device executive Jim Mazzo for a third time for violating insider trading rules after two prior efforts ended in hung juries.
10 of 12 jurors in Mazzo’s second mistrial in February favored acquitting him on at least 19 of 20 counts. In May 2017 in the first trial, the jury hung 8-4 for conviction of the cofounder of Allergan spinoff, Santa Ana-based Advanced Medical Optics (AMO).
Larry Rosenthal is a veteran federal prosecutor who has tried many insider-trading cases.
“Surprised not shocked,” Rosenthal said. “Majority of jurors did convict in the first trial and the deterrent effect with white-collar convictions is very real.”
But the prosecutor added that “after two swings and misses it’s a surprise.”
Lawyers for both sides held a status conference before Judge Andrew Guilford Tuesday. Prosecutors don’t have to file a new charging document.
Assistant U.S. Attorney Stephen Cazares, who handled the first two trials, hopes to convince a third federal jury Mazzo violated the 1934 Securities Act by willingly sharing nonpublic information with his former neighbor and ex-Angels third baseman Doug DeCinces on the pending buyout of AMO by Abbott Labs in January 2009.
DeCinces was convicted of multiple counts of insider trading in that spring 2017 proceeding after making $1.3 million trading AMO stock. The ex-ballplayer then changed his story and testified against Mazzo in the second trial.
As a cooperating witness, DiCinces awaits sentencing. A third trial would delay his sentencing further.
Prosecutors concede Mazzo didn’t profit trading AMO stock. The former CEO’s lawyers are asking for an extension to March 23 to file a request that all charges be dropped—called a Motion for a Judgment of Acquittal, under Rule 29 of the Federal Rules for Criminal Procedure.
The motion essentially says a third trial would amount to double jeopardy or prosecution based on insufficient evidence.
Judge Guilford agreed to the extension and if he grants the formal request it will stop a third prosecution.
“Wouldn’t shock me if the judge brings the lawyers back after that,” Rosenthal said, “and basically says to the government, ‘Why are you doing this? Why a third trial?’”
Barring that, a status conference April 30 will have the court looking at a date for a third trial beginning in June.