Grand Jury Hears Securities Evidence Against Texas AG

McKINNEY, Texas (CN) - A Texas grand jury is hearing testimony accusing Attorney General Ken Paxton of breaking securities laws before he was elected last year, when he was a state senator.

Special prosecutors Brian Wice and Kent Schaffer appeared at the Collin County Courthouse on Tuesday with Texas Rangers investigators. Neither prosecutor commented on the investigation or on whether they have finished presenting evidence to the grand jury.

Schaffer said on July 1 he would ask the jury to indict Paxton on first-degree felony securities fraud charges, as the Texas Rangers had found new evidence of securities fraud of more than $100,000.

The state Securities Board fined Paxton $1,000 last year after he admitted that he had solicited clients for a friend's investment firm while he was a state senator, without being registered as an investment adviser. Paxton paid the fine and was reprimanded by the Securities Board.

A first-degree felony is punishable by up to 99 years or life in state prison and a $10,000 fine.

"We have a sufficient amount of evidence," Schaffer said on July 1. "Whether it leads to a criminal indictment or not is up to the grand jury."

Schaffer said the new evidence goes beyond the admissions Paxton made to the Texas Securities Board last year. Texans for Public Justice, a government watchdog, then demanded a criminal investigation.

Travis County District Attorney Mary Lehmberg's Public Integrity Unit referred the case to Dallas and Collin counties.

After Dallas County District Attorney Susan Hawk declined to pursue the case and Collin County District Attorney Greg Willis asked to be recused, Wice and Schaffer were appointed as special prosecutors. Both are from Houston.

'"The Rangers went out to investigate one thing, and they came back with information on something else," Schaffer said on July 1. "It's turned into something different than when they started."

The new allegations sparked a vicious and public war of words between the prosecutors and Paxton, who called Wice and Schaffer "inexperienced" and "politically motivated." He also complained that they are from Houston, though there were plenty of attorneys closer to Austin.

"This appears to be a politically motivated effort to ruin the career of a longtime public servant," Paxton spokesman Anthony Holm said on July 2. "These attacks on Ken Paxton appear to have become a political hit job in the media, perhaps having the effect of inappropriately influencing the grand jury."

Holm said on Tuesday that the prosecutors had a "conflict of interest" because they defend clients from criminal charges. He said the Securities Board was "very clear" that Paxton had not committed a crime and that "we are only here because of liberal activists."

"We have two special prosecutors with a direct conflict of interest, we shouldn't be surprised that they're jumping up, saying, 'Hey, I'll try to prosecute the attorney general of Texas,'" Holm told WFAA-TV. "Their backgrounds, entire careers are defense lawyers - defending child molesters and drug cartel leaders - the exact people the attorney general is duty-bound to try and put in prison."

Asked about Holm's comments as he was leaving the courthouse, Schaffer told WFAA that Holm gets "paid to say" such things.

"He needs to tone it down a little bit," Wice said as he left with the Texas Rangers. "It's business. It's not personal."

Follow @davejourno

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