Associated Press is reporting that former MLB star third baseman Doug DeCinces was convicted last week of insider trading, and faces 10 years or more in prison.
DeCinces received a tip in 2009 from his neighbor James Mazzo who was then CEO of medical device firm Advanced Medical Optics, that the company was about to be sold. DeCinces and Mazzo were neighbors in Laguna Beach, California.
DeCinces then went out and bought more than 90,000 shares in Advanced Medical Optics, just days before Abbott Laboratories (NYSE:ABT) bought the company. DeCinces then sold the shares for a profit of about $1.3 million.
In addition, 14 other people made another $1.3 million after DeCinces passed on the tip to friends and family members.
One DeCinces friend, David Parker, was also convicted of three counts of tender-offer fraud. However the jury deadlocked in Mr. Mazzo’s case, and a mistrial was declared.
DeCinces, who retired from major league baseball in 1987 and is now 66 years old, will remain free until sentencing. A sentencing hearing date has not yer been set.
Leading up to the time of the acquisition, Advanced Medical Optics had seen its stock price plunge from more than $30 per share to under $10 in the wake of the 2008 Wall Street crash. It more than doubled after the merger was announced.
Assistant U.S. Attorney Jennifer L. Waier said in her closing arguments:
Even though everyone else was losing, they won. They won big. They won because they knew tomorrow’s news today.
In making their case, prosecutors claimed that DeCinces even called his broker while his father lay dying in the hospital.
The defense denied the allegations and accused the government of conducting a biased and shoddy investigation.
Prosecutors ended up calling more than two dozen witnesses during the two-month trial, but defense lawyers argued that none of them directly implicated DeCinces or his co-defendants.
DeCinces earlier faced SEC civil charges of insider trading. That case settled in 2011 with DeCinces agreeing to pay $2.5 million to the SEC.
DeCinces spent 15 years in the major leagues playing mainly third base for the Baltimore Orioles and California (now Los Angeles) Angels, making the American League All-Star team in 1983. According to Baseball-Reference.com, his career totals include 1,649 games played, 1,505 hits, 237 home runs, and a career batting average of .259.