Texas Atty. Gen. Paxton, indicted in securities fraud, surrenders

Texas Atty. Gen. Paxton, indicted in securities fraud, surrenders
Texas Atty. Gen. Ken Paxton, left, seen here arriving at last week's Texas Senate Health and Human Services Committee hearing. (Eric Gay / Associated Press)

Texas' attorney general surrendered to authorities Monday in connection with felony charges that he misled investors in a scheme to funnel money to himself.

Ken Paxton, 52, turned himself in at the Collin County Sheriff's Office, where he was booked in connection with three charges: two counts of fraud and one count of failing to register as an investment adviser.


Paxton pleaded not guilty and pledged to mount a vigorous defense, even as most high-ranking Texas Republicans kept their distance.

Other prominent Texas politicians have been indicted while in office – most recently, then-Gov. Rick Perry last year – but they could wave off such prosecution as politically motivated.

Not so for Paxton, a tea party Republican who was investigated by the state’s iconic Texas Rangers and indicted by a grand jury in one of the most conservative counties in Texas.

"He's bleeding to death and don't know it yet," said Southern Methodist University political analyst Cal Jillson.

Paxton has been in office only seven months. A former member of the Texas House of Representatives first elected in 2002, Paxton rose quickly in Texas politics, capped by his election in November to the state's highest law enforcement position, running on a tea party platform.

But before his election, in the difficult GOP primary, Paxton disclosed that he violated state securities law by not telling regulators that he received a commission when he sent clients from his law firm to a financial planner.

Paxton paid a $1,000 fine, but a public watchdog group, Texans for Public Justice, called for a broader criminal inquiry, which was led by the Texas Rangers.

A Collin County jury handed up felony charges that allege that Paxton duped investors into backing Dallas-area technology firm Servergy Inc. without disclosing that he was receiving a commission for their investment.

According to the indictment, Paxton, a McKinney, Texas, attorney and real estate adviser at the time, cobbled together the scheme in 2011, when he drew in at least two other investors who put in at least $100,000 each.

The booking documents show that he faces two counts of first-degree securities fraud and a lesser charge of failing to register with state regulators. Each of the fraud counts carries a punishment of five to 99 years.

The district attorney in Collin County declined to take the case, citing a conflict of interest because he and Paxton have a longstanding business relationship, and handed it off to a pair of Houston defense attorneys, Brian Wice and Kent Schaffer, who were appointed to prosecute the case.

"Our statutory mandate as special prosecutors is not to convict, but to see that justice is done," Wice and Schaffer said in a statement issued Saturday.

Paxton won't need to step down unless he is convicted, at which point his law license would be suspended.


"Attorney General Ken Paxton will plead not guilty to these accusations and he will demand a trial by jury," Paxton's attorney, Joe Kendall, said in a statement. "He is looking forward to the opportunity to tell his side of the story."

Texas Democrats urged Paxton to leave office immediately, saying he should spare the state the embarrassment of a lengthy trial.

Paxton becomes the second high-ranking Texas official to be booked at a county jail in one calendar year.

Last August, Perry turned himself in at the Travis County Jail after a complaint from another Texas watchdog group included accusations that Perry threatened to veto funding to the state's Public Integrity Unit, which was investigating one of Perry's prized state initiatives.

The two men have something else in common: Like Perry before him, Paxton smiled for his mug shot.

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