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After yearslong legal battle, Texas AG nears settlement with whistleblowers

The legal fight, which grew out of an FBI tip by seven whistleblowers in 2020, is just one of many controversies facing the scandal-plagued Republican attorney general.

AUSTIN, Texas (CN) — The office of Texas Attorney General Ken Paxton said in a joint court filing on Friday that it planned to settle with a group of ex-employee whistleblowers, bringing an apparent end to a legal battle that has dogged the AG's office since 2020.

Under the terms of the settlement, Paxton has agreed to spend $3.3 million in taxpayer dollars to settle with the employees, who accused Paxton of wrongfully retaliating against them after they reported alleged crimes by the Republican attorney general to the FBI. Paxton also agreed to delete a news release in which he referred to the whistleblowers as "rogue employees" making "false accusations." At press time, that statement was still online.

Last but not least, Paxton agreed to issue a rare public apology, formally expressing regret for calling the officials "rogue employees" and acknowledging they "acted in a manner that they thought was right."

In exchange, the former employees would withdraw their whistleblower suit, which they first filed in Travis County in 2020. The settlement is not yet final and could still fall apart for other reasons — for example, if other state officials refuse to pay out the $3.3 million sum of public funds.

This particular Paxton controversy started in September 2020, when a total of seven employees working in the AG's office reported what they said was corruption, bribery and abuse of office to federal law enforcement.

According to the staffers, Paxton used his office to stymie investigations into Nate Paul, a real estate investor who had been raided by the FBI as part of a separate legal matter. Paul had donated $25,000 to Paxton's 2018 election campaign.

Following the report, the FBI subpoenaed Paxton, sources in 2020 told the Austin-American Statesman and KVUE, an Austin-area ABC affiliate. Paxton began what whistleblowers said was a campaign of retaliation against them, pushing them out of their jobs. Four of the seven later sued.

That campaign unfolded partially in public, as Paxton sowed doubt about the whistleblowers' credibility. In addition to the "rogue employees" news release, he also publicly denied the allegations, warning that "making false claims is a very serious matter" and promising an investigation.

In August 2021, Paxton attempted to clear himself of the allegations. A 374-page report issued by his own office declared that he had "committed no crime."

Unfortunately for Paxton, that report did little to slow the whistleblower suit against him. Just two months later, in October 2021, the Third Court of Appeals in Texas declined to dismiss the case.

“A state employer cannot fire an employee because he reports illegal conduct by the employer,” Darlene Byrne, chief justice for that court, wrote.

As for any criminal charges in this matter, it's unclear what the current status is of any possible FBI investigations into Paxton. The agency did not respond to a request for comment by press time.

This is hardly the first time that Paxton, who was first elected in 2015, has found himself in legal troubles.

Months after he took office, a grand jury in Collin County indicted Paxton on charges of securities fraud. That case, which is still ongoing after years of controversy, could send Paxton to prison for life if found guilty.

In 2016, the U.S. Securities and Exchange Commission also launched a civil action into Paxton, though that case was later dropped. Paxton has also faced ethics complaints, including one concerning his efforts to overturn the 2020 election results in favor of Donald Trump, which ultimately led to a lawsuit from the Texas Bar Foundation. In response, Paxton launched an investigation into the foundation, accusing it of "possibly aiding and abetting the mass influx of illegal aliens."

For now, though, Paxton faces at least one less legal headache. In statements to The Texas Tribune, lawyers for the 2020 whistleblowers confirmed the pending settlement, describing their clients as "honorable men."

Paxton, for his part, said the $3.3 million payout is about saving taxpayer money.

"I have chosen this path to save taxpayer dollars," he said in his own statement. "I look forward to serving the People of Texas for the next four years free from this unfortunate sideshow.”

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