By JUAN A. LOZANO (Associated Press)
Ken Paxton, the Texas Attorney General, has reached a deal to resolve criminal securities fraud charges that have followed him for nearly 10 years. He will pay nearly $300,000 in restitution under the agreement.
Special prosecutors in a Houston courtroom announced the deal less than three weeks before Paxton's scheduled trial on felony charges. This comes after Paxton was indicted in 2015 for allegedly deceiving investors in a tech startup near Dallas.
Under the 18-month pre-trial agreement, Paxton will have three felony counts dropped, pay full restitution to victims, and complete 100 hours of community service and 15 hours of legal ethics education.
In the courtroom, Paxton only affirmed that his signature was on the agreement without saying anything else.
Paxton released a statement expressing relief that the case was finally resolved and thanked his family and supporters for sticking by him, but he remained firm about his innocence.
Paxton declared in a statement after the hearing, “There will never be a conviction in this case nor am I guilty.”
Paxton’s lawyers emphasized that he did not admit guilt under the agreement.
Dan Cogdell, one of Paxton’s attorneys, commented, “This case has been pending literally longer than the Beatles were together — it was time to move on — and this proposal by the Special Prosecutors allows him to do just that.”
Paxton's agreement with prosecutors allows him to continue in his elected position and has no impact on his law license, marking a significant legal and political triumph for one of the nation’s most prominent state attorneys general.
Brian Wice, a Houston attorney serving as a special prosecutor in the case, hailed the deal as a victory that requires Paxton to reimburse investors, including a former GOP lawmaker who worked with Paxton in the Texas Legislature.
Wice acknowledged the lengthy legal process that involved four different judges, courtrooms in Dallas and Houston, and was affected by the aftermath of Hurricane Harvey in 2017.
Wice said, “This case, no pun intended, was a perfect storm of everything that could have derailed and delayed the prosecution.”
The resolution of the securities fraud case marks a significant turnaround for Paxton, who faced the criminal case and the risk of being removed from office by his top aides reporting him to the FBI just a year ago.
However, Paxton has emerged stronger. He fought against numerous GOP lawmakers involved in the 2023 effort to impeach him, particularly targeting state House Speaker Dade Phelan. He has also not ruled out challenging Republican Sen. John Cornyn in 2026.
Paxton still has legal problems, though. A federal investigation is looking into the same accusations as his impeachment, and former aides who reported Paxton to the FBI want him to testify in a whistleblower civil lawsuit.
The securities fraud case has hung over Paxton for almost his entire time in statewide office. However, Paxton, 61, has shown political strength time and time again, winning over conservative activists, and, importantly within the GOP, former President Donald Trump.
Paxton had been accused of deceiving investors in a Dallas-area tech company called Servergy by not revealing that the company was paying him to recruit them. He was charged with two counts of securities fraud and one count of not being registered as an investment advisor.
James Spindler, a business and law professor at the University of Texas at Austin, said it was surprising that Paxton even faced a felony prosecution. He described one of the charges — failing to register as an investment adviser — as a technical infringement and said most similar cases are settled as civil lawsuits.
Legal experts have said over the years that the longer the case goes on, the more difficult it would be for both sides.
“You are going to have people coming up to testify about conversations that happened 13 years ago,” Spindler said Monday, before the deal was announced. He said the amount of time that has passed could cast doubt on the credibility of testimony in court.
“That can be kind of a mess sometimes,” Spindler said.
Paxton was also charged in a federal civil complaint filed by the U.S. Securities and Exchange Commission over his work with Servergy. But a federal judge in March 2017 dismissed the complaint against Paxton. The person who recruited Paxton to work with Servergy, ex-company CEO William Mapp, was found responsible by a jury for deceiving investors and ordered to pay a civil penalty of $22,500. Mapp lost his job with Servergy and later had to work as an Uber driver to make ends meet, according to court documents.
The fraud allegations were among the original 20 articles of impeachment but were set aside during the impeachment trial in the Texas Senate last year.
Paxton’s political opponents, especially Republicans, had used the fraud charges against him in elections. But Paxton has twice been reelected as attorney general since his indictment, most recently in 2022.
___
This story corrects the spelling of the name of one of Paxton’s attorneys. He is Dan Cogdell, not Don.
___
___
Follow Juan A. Lozano: https://twitter.com/juanlozano70
