Indicted Texas AG|Steps Back a Bit

FORT WORTH (CN) – Texas Attorney General Ken Paxton has recused himself from some duties as he faces criminal securities charges that could send him to prison for 99 years.
     Paxton’s spokeswoman Cynthia Meyer told Texas Lawyer on Wednesday that the attorney general’s office followed its policy and state rules and laws to screen Paxton from participating in matters in which he may have a conflict of interest.
     Meyer said Paxton’s participation is screened for anything related to the charges against him, any of the five law firms hired to represent him in the criminal case, and anything that involves the State Securities Board or the Texas Ethics Commission.
     “The OAG will revise this screening procedure as needed to continue to avoid any conflicts,” Meyer said. “Any recusal under this policy is intended to go beyond the letter and spirit of the governing law and rules.”
      Paxton was indicted in July by a Collin County grand jury on two first-degree felony counts of securities fraud and a third-degree felony count of failing to register with the securities board. The charges date back to 2011, when Paxton was a member of the Texas House of Representatives.
     Paxton, 53, is a Republican attorney from McKinney, north of Dallas. He served in the Texas House from 2003 to 2013 and in the Texas Senate from 2013 until he became attorney general in January.
     The securities board fined Paxton $1,000 last year after he admitted he had solicited clients for a friend’s investment firm, Mowery Capital Management, while he was a state senator and without being registered as an investment adviser. Paxton paid the fine and was reprimanded.
     The new charges came from a Texas Rangers investigation that began after the board’s findings. The securities fraud charge is punishable by 5 to 99 years or life in state prison, the failure to register charge by 2 to 10 years.
     Paxton is accused of fraudulently selling more than $100,000 in Servergy stock to two investors in July 2011 without disclosing that he would be paid commissions on it. He also failed to disclose that he had been given 100,000 shares in the company but had not invested in the company himself, according to the indictment.
     One of Paxton’s criminal defense attorneys, Bill Mateja with Fish Richardson in Dallas, told Texas Lawyer the recusals make sense.
     “That’s a good thing, because what that indicates is that he either has, or may have, or may perceive to have a conflict of interest, and you actually don’t want him presiding over matters in which he may have real or perceived conflicts of interest,” Mateja said.
     Paxton’s first recusal became public in September, when he recused himself from signing a nonbinding opinion asking if it was legal for a county to reimburse the criminal defense costs of a county commissioner who was indicted, but found not guilty in a jury trial. Paxton explained in a letter that “staff members involved in the opinion process must recuse themselves from matters in which there may exist an actual or perceived conflict of interest.”
     The opinion was signed by First Assistant Attorney General Chip Roy, not by Paxton.
     “Any such recusal is intended to go beyond the letter and spirit of the governing law and rules in order to avoid even the appearance of impropriety and to demonstrate our ongoing commitment to the highest ethical standards,” Roy wrote in a Sept. 28 letter.
     Paxton has denied the criminal charges against him and told citizens he is still on the job. He sued the federal government on Tuesday in Wichita Falls Federal Court, claiming that Obamacare regulations that force states to pay a health insurance providers fee or risk losing Medicaid funding impose a coercive and unconstitutional tax.

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