Grand jury to hear fraud case on AG

Lawyer: Texas’ securities law broken

HOUSTON -- Evidence that Ken Paxton, the attorney general of Texas, committed securities fraud before he became the state's top lawyer will soon be presented to a grand jury, a special prosecutor said this week.

Paxton, a Republican, was dogged by legal troubles last year on the campaign trail before he won election as attorney general in November. Those legal troubles have intensified in recent days.

One of two special prosecutors handling the case said Wednesday that he will present evidence to a grand jury in a few weeks that Paxton violated state securities law. The special prosecutor, Kent Schaffer, declined to discuss the allegations but said they were uncovered in an investigation by the Texas Rangers.

"I think there's sufficient evidence to present to the grand jury," Schaffer said Thursday.

A spokesman for Paxton, Anthony Holm, said in a statement that the case appeared to be a politically motivated effort to "ruin the career of a longtime public servant." Holm said three agencies -- the state Securities Board and prosecutors in Austin and in Dallas -- had already reviewed the matter without pursuing a criminal case.

"From the outset their intention appears to have been to try this case in the media, not the courtroom," Holm said of the special prosecutors.

The possible indictment comes as Paxton has been raising his political profile, and angering Democrats, by taking President Barack Obama's administration to court over environmental, immigration and other issues.

Also, after last week's Supreme Court ruling in support of same-sex marriages, Paxton has encouraged county clerks in Texas to refuse to issue marriage licenses to same-sex couples if doing so would violate their religious beliefs.

Last May, Paxton was reprimanded by the Securities Board for failing to register as a representative of an investment adviser when he solicited clients for a friend's investment firm. Paxton solicited three clients for the firm, Mowery Capital Management, in 2004, 2005 and 2012, and in return was paid a portion of the asset management fees, according to the board.

At the time, Paxton was a member of the Texas House of Representatives and had not registered with the Securities Board. Paxton was fined $1,000.

Schaffer, the special prosecutor, said the allegations the grand jury will hear in the northern Dallas suburb of Collin County were unrelated to Paxton's reprimand by the Securities Board.

Holm, Paxton's spokesman, questioned the experience of the special prosecutors -- Schaffer and Brian Wice, who are defense lawyers.

"It appears that they have prosecuted only one case between them," Holm said. "Not only do they appear inexperienced as prosecutors, they are from Houston. Meanwhile thousands of experienced prosecutors and former prosecutors are in the Dallas area."

Schaffer and Wice said in a joint statement that none of the agencies mentioned by Holm had reviewed the new evidence assembled by the Texas Rangers and that they had been sent in from Houston to ensure local politics stayed out of the investigation.

"Our investigation will continue to be informed by what our oaths as special prosecutors commands: to do justice," the statement said. "And sound bites and personal attacks won't change that."

The possible criminal case against Paxton started when a nonprofit government watchdog group, Texans for Public Justice, filed a complaint against him last year after he was reprimanded, asking the district attorney in Austin's Travis County to prosecute him for felony criminal conduct. The case was ultimately forwarded to other authorities; the Texas Rangers began an investigation, and a judge named the special prosecutors.

Texans for Public Justice is the organization that filed a complaint against Rick Perry when he was the governor. That complaint led to a judge's appointing a special prosecutor and Perry's indictment last year on charges of abusing his official capacity and coercing a public servant, part of a case involving the use of his veto power. That case is still pending.

A Section on 07/04/2015

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