Wednesday, July 6, 2016

“Family Friends” Help Bankroll AG Ken Paxton’s Criminal Defense

Posted By on Wed, Jul 6, 2016 at 7:20 AM

click to enlarge Texas Attorney General Ken Paxton sat for a mugshot after he was booked on multiple felony counts last July
  • Texas Attorney General Ken Paxton sat for a mugshot after he was booked on multiple felony counts last July
State bribery laws generally prohibit Texas politicians from taking cash or other gifts from people who are subject to their authority as an elected official. When it comes to Ken Paxton, the state’s top law enforcement official, that prohibition would seemingly apply to just about everyone.

That is, however, unless you're a “family friend” of Texas’ scandal-prone attorney general, who currently faces felony securities fraud charges and a lawsuit by the federal Securities and Exchange Commission alleging he duped investors into dumping money into a probably bogus tech firm without disclosing that he was being paid for his recruiting efforts. In financial disclosures Paxton filed with the Texas Ethics Commission on Friday, Paxton cites a loophole in state law that allows elected officials to take donations and gifts from anyone with an “independent relationship” to the officeholder.

According to those filings, “family friends” who Paxton says meet the “independent relationship exception” under state law have so far donated some $329,000 toward his criminal defense. That includes James Webb, the CEO of a north Texas medical imaging business who shelled out some $100,000 to help Paxton fight the criminal charges against him. According to the Texas Tribune, Webb has helped bankroll Paxton’s political campaigns to the tune of $355,000 in recent years.

How exactly Paxton, who’s hired some of the state’s top white collar criminal defense lawyers to assist in his case, would pay for his defense has been an open question since last year when he became the state’s first sitting attorney general in more than three decades to face criminal indictment. Since the charges against him don’t stem from his official duties in office, he’s barred by Texas law from tapping campaign contributions or taxpayer money for what’s expected to be a huge legal tab.

Allegations of shady investment practices dogged Paxton even before voters elected him AG in 2014. As he ran for statewide office, a Dallas couple went public claiming they’d dumped hundreds of thousands of dollars into a doomed real estate investment scheme only to find out later, once the venture had tanked, that Paxton had actually been paid to solicit their money. (Texas voters elected Paxton anyway.)

The two most serious criminal indictments against Paxton, for first-degree felony securities fraud, allege a similar scheme. Prosecutors claim Paxton duped a fellow Republican state lawmaker and another businessman into dumping money into a North Texas tech company called Servergy without telling investors he was being compensated to solicit their money. The U.S. Securities and Exchange Commission earlier this year filed a lawsuit against Paxton and others tied to Servergy, claiming the company lied to investors about the very data servers they were hawking. For instance, the feds say the company falsely claimed the machines required 80 percent less cooling, energy and space than others on the market. The feds also say Servergy lied to investors by saying its servers had already been sold to huge companies like Amazon.

As the case has dragged on in appeals, Paxton’s legal team has done little to challenge the actual allegations against him, but rather spinning what prosecutors have called a “Grassy Knoll-like conspiracy” that accuses the Republican judge who oversaw the grand jury that indicted the attorney general of deliberately mishandling the case. Paxton, in legal filings, has called the charges against him politically motivated and the judge who oversaw the indictments, a judge first appointed to the bench by former Gov. Rick Perry, “vindictive.”

In legal filings, prosecutors have dismissed Paxton’s defense so far as nothing more than a “pre-trial shell game” that came dangerously close to erroneously accusing a sitting judge of criminal misconduct, calling his theory of politically-motivated oppression a “cut-from-whole-cloth fictional rant.” With the appellate courts refusing to dismiss the charges against him, looks like Paxton is going to need more “family friends” to help fund that rant.



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