Texas Attorney General Paxton booked on fraud charges

[August 04, 2015]  By Jon Herskovitz and Marice Richter
 
 AUSTIN, Texas (Reuters) - Texas Attorney General Ken Paxton, a Tea Party Republican, surrendered to authorities on Monday and was booked on three felony charges involving suspected securities fraud.

Paxton, the state's top law officer, appeared for processing and posed for a mug shot in Collin County, near Dallas. He was released on bond of $35,000, according to the Collin County Sheriff's office.

Paxton, who defeated an establishment Republican in the primaries, became attorney general this year pledging to fight abortion, same-sex marriage and the Affordable Care Act, also known as Obamacare.

He drew national attention when he said Texas county clerks who object to gay marriage on religious grounds can refuse to license same-sex couples despite the U.S. Supreme Court ruling requiring states to allow same-sex marriage.

Paxton is facing two security fraud charges related to stock sales and compensation from the Texas technology firm Servergy. The company had been under federal investigation for suspected misstatements about orders for its data servers from major firms it said includes shopping site Amazon.
 

He is also facing charges he illegally acted as a securities agent for a separate firm. He can face up to 99 years in prison if convicted on a first-degree felony charge.

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

A grand jury in July heard evidence presented by the prosecutors and the Texas Rangers, a respected statewide police agency, which investigated Paxton.

The Texas Democratic Party called for him to resign while the state's Republican Party criticized the investigation.

"Some of the outrageous events surrounding this sloppy process certainly do not typify the level of quality that Texans expect from our judicial system," Texas Republicans said in a statement.

When in the state legislature, Paxton was hired to seek clients by investment firm Mowery Capital Management, which is facing allegations from the State Securities Board of defrauding investors.

The board found in May 2014 that Paxton was not properly registered as an investment adviser. It reprimanded him and fined him $1,000.

"Ken Paxton isn’t fighting for his political life, he's fighting to avoid spending life behind bars. He won't have time to do anything else," said Matt Angle of the Lone Star Project, a Democratic political action committee.

(Reporting by Jon Herskovitz in Austin and Marice Richter in Dallas, Additional reporting by Lisa Maria Garza in Dallas; Editing by Mohammad Zargham)

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