UNITED STATES NEWS

How the criminal case against Texas AG Ken Paxton abruptly ended after nearly a decade of delays

Mar 26, 2024, 9:06 AM | Updated: 2:38 pm

AUSTIN, Texas (AP) — The criminal case against Texas Attorney General Ken Paxton on securities fraud charges has ended after nine years — a span during which the Republican was reelected twice, impeached and acquitted, and emerged more politically powerful than ever.

He will stay in office and must pay nearly $300,000 in restitution under an agreement announced in a Houston courtroom Tuesday. The deal with special prosecutors abruptly ends the long-running saga, which at one time threatened Paxton’s rising political fortunes and could have sent him to prison, but later came to underline his resilience within the GOP.

The trial had been scheduled to start in April, putting Paxton closer than ever to finally having his day in court to face charges of duping investors in a tech startup. He still has legal troubles, including an FBI investigation and a whistleblower lawsuit from former aides who accuse him of corruption.

AN INVESTMENT OPPORTUNITY

Long before Paxton tried to help former President Donald Trump overturn the 2020 election and stockpiled lawsuits against the Biden administration, he was a little-known Republican legislator whose courting of the party’s far right catapulted his ascent to Texas’ top law enforcement official.

But barely five months into the job in 2015, a grand jury in Paxton’s hometown of McKinney indicted him on felony charges of duping investors in a tech startup called Servergy. The accusations stemmed from deals Paxton allegedly steered in 2011 while he was still a state lawmaker. One investor he recruited was a fellow GOP legislator who put $100,000 into the company.

The indictment accused Paxton of recruiting investors while not disclosing that Servergy was compensating him to do so. He pleaded not guilty and his lawyers attacked the case as a political smear campaign.

Federal regulators also filed a civil lawsuit against Paxton. But a federal judge in 2017 dismissed the case brought by the U.S. Securities and Exchange Commission, a ruling that raised questions about the strength of the criminal prosecution.

“It is technically a felony under state law but it is extraordinarily rare to see this picked up in an actual felony prosecution,” said James Spindler, a professor of business law at the University of Texas at Austin.

DELAYS PILE UP

The criminal case moved slowly from the start and was shuffled from one judge to the next.

A significant battle began outside the courtroom when Paxton allies spearheaded attacks on the special prosecutors’ $300 hourly rate, calling it an abuse of taxpayer money. Local leaders in Collin County, where Paxton lives and which is controlled by Republicans, agreed and voted to slash the pay.

As the years passed, Paxton’s lawyers blamed the delays on special prosecutors petitioning courts to restore their pay. Claims of unfair venues and biased jury pools also dragged the proceedings, which stood still for nearly a year.

Brian Wice, one of the special prosecutors, had previously indicated that he would consider a pre-trial deal a “slap on the wrist.” He said Tuesday that they had since reevaluated their chance of success based on evidence and witnesses.

Legal experts have said that since so much time has passed, the credibility and memory of witnesses would have likely been an obstacle at trial.

Jonathan Macey, a corporate law professor at Yale Law School, said the deal “seems like a reasonable resolution given how long things have been going on.”

IMPEACHMENT, THEN ACQUITTAL.

As the securities fraud case languished, a potentially more serious threat erupted in 2020: an extraordinary revolt within the Texas attorney general’s office, where eight of Paxton’s closest aides reported him to the FBI.

They accused their boss of corruption and claimed he abused the office to benefit a wealthy Austin developer, Nate Paul, who was indicted last year on charges of making false statements to mortgage landers. Paul has pleaded not guilty.

The accusations propelled a historic impeachment in the Texas House, where Paxton once served. But in the Texas Senate — where Paxton’s wife, Angela Paxton, is one of 19 GOP senators — he was acquitted in a trial that laid bare the widening and increasingly bitter divisions among Republicans.

WHAT’S NEXT

With the impeachment and securities fraud case now behind him, Paxton is set to continue a political revenge campaign against Republicans who sought to remove him from office.

At the top of that list is Texas House Speaker Dade Phelan, who oversaw the impeachment vote and was forced into a May runoff against a challenger backed by Paxton.

Paxton won’t be on the ballot again until 2026 and has not ruled out a primary challenge against Republican U.S. Sen. John Cornyn, who would be up for reelection that same year. Prior to the impeachment, Cornyn was one of a few prominent Texas Republicans to voice concerns about Paxton’s legal troubles.

It also remains unclear when or how the FBI investigation surrounding Paxton will resolve.

___

This story corrects the spelling of the name of one of the special prosecutors. He is Brian Wice, not Brice.

___

Associated Press reporters Acacia Coronado and Juan A. Lozano in Houston contributed to this report.

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How the criminal case against Texas AG Ken Paxton abruptly ended after nearly a decade of delays