Texas Attorney General Ken Paxton is officially under indictment on securities fraud allegations. Word leaked out over the weekend on a Collin County grand jury decision which faces the hefty potential prison sentence of up to 99 years, if Paxton is convicted. The entire case is complicated, with a mix of politics and actual potential law violations. It takes more than a fine-toothed comb to look at the history of it. But this isn’t like the indictment of ex-Texas Governor Rick Perry. That was purely political, and just an attempt by Texans for Public Justice to derail Perry’s political career. Texans for Public Justice may actually be the proverbial blind squirrel who finds the nut in the Paxton case — a political indictment which ended up becoming much more.
It all has to do with Paxton not registering as an investment adviser representative for Mowery Capital Management between 2004 and 2012. He admitted to breaking state law before the Texas Securities Board and was fined $1K last year. It seemed over until Texans for Public Justice filed a criminal complaint in Travis County. This is where it gets confusing, because Travis County ruled it had no jurisdiction, so Texans for Public Justice took it to Collin County, where Paxton lived. The Dallas Morning News’ timeline of the Paxton probe shows the grand jury wanted to see the case, so two special prosecutors from Houston were picked to help the Texas Rangers in their investigation. The Texas Rangers aren’t a political outfit; they’re the agency which looks into public corruption, and their involvement makes it difficult to chalk the investigation up to pure politics.
On the surface, the allegations aren’t pretty, as the New York Times reports:
In the most serious charges, first-degree securities fraud, Mr. Paxton is accused of misleading investors in a technology company, Servergy Inc., which is based in McKinney, his hometown. He is accused of encouraging the investors in 2011 to put more than $600,000 into Servergy while failing to tell them he was making a commission on their investment, and misrepresenting himself as an investor in the company, said Kent A. Schaffer, one of the two special prosecutors handling the case. The group of investors were Mr. Paxton’s friends and included a colleague in the Texas House, Representative Byron Cook.
This is pretty serious stuff, although it’s not clear what special prosecutor Kent Schaffer means by “misrepresenting himself” as an investor. If Paxton said he wasn’t an investor, then that’s just stupid, unless he was acting in an official capacity as an investment adviser, at which point it could be a violation of the law. If he did tell them he was an investor, then it makes no sense how that’s a crime. The AP reported in July Paxton had 10,000 worth of shares in Servergy, which is under investigation by the SEC. How Servergy became connected to the Texas case won’t be revealed until the indictment is made public or Paxton’s trial. It really is political intrigue, which is now turning into legal intrigue.
Another troublesome issue is how public Schaffer has been on the investigation. He’s been willing to talk to everyone and even told WFAA last month there were going to be multiple charges because of what the Texas Rangers had found.
The Rangers went out to investigate one thing, and they came back with information on something else. It’s turned into something different than when they started.
Schaffer is a defense attorney in Houston, who has defended Democrats accused of wrongdoing, plus Farrah Fawcett and former MLB third baseman Ken Caminiti. He seemed to imply he wasn’t politically aligned with Paxton in his statement to the New York Times, but then, rightly, pointed out he was simply following what the Texas Rangers had found (emphasis mine).
I have nothing personal against Mr. Paxton based on his politics. Even if you found fault with Brian Wice or myself, how do you find it with the Texas Rangers? These are the most honest, straightforward, incorruptible police officers you’re ever going to find. They don’t have political motivations, and they certainly wouldn’t have any against the sitting attorney general.
Schaffer is absolutely correct, but it’s still weird how often he talked to media outlets about what was going on. It’s possible he just likes the spotlight because he’s been on TV before. It could just be a Houston vs. Dallas thing. It’s just doesn’t sit well because prosecutors don’t tend to be glory hounds, at least not in Texas. The feds were very quiet about their probe into Dallas County Commissioner John Wiley Price, even after they raided his home and office. Things mostly stay quiet in Texas, which isn’t a bad thing. So Schaffer’s demeanor is just strange in this case.
It’s also strange the Collin County grand jury had to ask Travis County for its information on Paxton. They didn’t just send the request to the DA, but also to law blogger Ty Clevenger. Clevenger isn’t a leftist, he’s a conservative and a Republican, who is interested in public corruption and wants to make sure politicians are as clean. It’s just odd the grand jury made sure he got the letter too. It’s possible the grand jury was worried they wouldn’t get the information from the DA unless they made sure it became publicly known. Clevenger’s main focus seems to be Collin County corruption, so it makes sense to alert him of their request. It’s still kinda weird.
Paxton isn’t commenting on what’s going on, nor are any of the state’s Republican leadership. They’re probably waiting to see details of the charges before speaking out. It’s a slight gamble, but no one wants to be the one demanding someone resign when no law was broken. But Paxton probably should resign, even if he’s innocent. He’s the top civil attorney of the state of Texas, which means he’s supposed to represent the state in all suits and pleas in the state Supreme Court. He can also give legal advice to the governor and other state officials, if they want him to. The Attorney General’s Office doesn’t need the distraction, nor does the Texas government. How can Paxton participate in his constitutional duties if he has to worry about being in court? If he resigns, the office stays in Republican hands because Governor Greg Abbott is one. There’s also the idea of the “air of impropriety” and how it can hurt more than just the person involved. If Paxton resigns and is acquitted, he can still continue his political career. It’ll just be setback a bit. If he doesn’t resign and is found guilty, it can end up hurting the entire Republican Party of Texas. The Texas Democratic Party is already claiming this shows the Texas GOP has a culture of corruption. This isn’t true, but it’s not stopping them to proclaiming it. Those claims will keep going during Paxton’s trial (unless he pleads guilty) and afterward. But unfortunately the indictment gives some credence to the Democrats’ claim. Texas may be the reddest of red states, but the electorate is changing and the GOP shouldn’t be caught with its pants down. The ball is in Paxton’s court now. He should probably step down.