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Ken Paxton Defends|Himself to Tea Party

DALLAS (CN) — Texas Attorney General Ken Paxton spoke at length for the first time about the felony securities fraud charges against him and implied that his bank accounts have been frozen, prompting his attorney to deny that Paxton ever had been audited or investigated by the IRS.

Paxton, a Republican from McKinney, spoke to the Northeast Tarrant Tea Party on Saturday, criticizing the media coverage of his case and self-interested fellow Republicans in the Texas Legislature.

"I want you to imagine that you have a neighbor and you have lived next to him for 30 years," Paxton said. "That neighbor has always been a pretty good neighbor. Sometimes he took out your dog when you are on vacation and watered your plants, says hi every morning. And then after 35 years that neighbor takes a new job. Suddenly, this neighbor is in all kinds of trouble. He is being investigated by the IRS ... some of his bank accounts are shut down. Some of his retirement accounts are being shut down. You find out the guy in being investigated by the Travis County DA, then the Dallas County DA, then the Collin County DA. And then you find out he is being investigated by the SEC. You have to ask yourself, is there a character problem here? This person has been in no trouble for 35 years and then, suddenly, they're having all this trouble.' Well, that's in essence what is happening to me."

Paxton said everything happened after he was sworn into office as attorney general.

"I have had no speeding tickets in my life," he said. "I have never been audited by the IRS. Never been investigated - never, no bar grievances with the State Bar."

Paxton's legal woes began when the Texas State Securities Board fined him $1,000 in 2014 after he admitted he had solicited clients for a friend's investment firm, Mowery Capital Management, without being registered as an investment adviser while he was a state senator. Paxton paid the fine and was reprimanded.

That case led to a Texas Rangers investigation that resulted a three-count felony securities fraud indictment in Collin County in August 2015.

Prosecutors say Paxton urged investors in 2011 to invest $600,000 in technology firm Servergy without telling them he would earn a commission on it, and misrepresented that he was investing in the McKinney-based company.

The Securities and Exchange Commission piled on two weeks ago when it filed a civil suit against Paxton and others in Dallas Federal Court, closely mirroring allegations in the criminal case - that he hid compensation he was given for touting Servergy.

Paxton's attorney, William Mateja with Polsinelli in Dallas, clarified his client's comments by denying that his bank or retirement accounts have ever been shut down.

"Paxton has not been audited or investigated by the IRS, as you can clearly see by his remarks below wherein he states that he has not been audited or investigated," Mateja said in a statement Monday evening.

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