Ken Paxton Tries Again|to Avoid Criminal Trial

DALLAS (CN) — Texas Attorney General Ken Paxton filed a last-ditch appeal Tuesday with the state's highest criminal appeals court, seeking to avoid trial on three felony securities fraud charges that could send him to state prison for 99 years.

Paxton, R-McKinney, was charged in Collin County in August 2015 with two first-degree felony counts of securities fraud and a third-degree felony count of failing to register with the Texas State Securities Board.

Prosecutors say Paxton raised money from investors for McKinney-based technology firm Servergy while he was a member of the Texas House of Representatives. He is accused of not telling investors he would earn commissions on the deals of falsely claiming that he was investing in the company.

A trial judge rejected Paxton's motions to dismiss the charges in December and the en banc Fifth District Court of Appeals in Dallas rejected his appeal in June.

In Tuesday's 59-page appeal, Paxton says he cannot be charged with failing to register because the company was registered with the SEC, so federal law preempts the state law requirement.

"(T)he Advisers Act clearly dictates that state regulation of investment advisers registered under federal law is entirely preempted by the federal securities laws, except for the limited ability of states to require the registration of an 'investment adviser representative who has a place of business located within the state' and who meet the federal definition of 'investment adviser representative,'" the appeal states.

"Unlike the vast majority of other states that have amended their laws to conform to the federal definition, Texas state law purports to require registration of an investment adviser representative ('IAR') without regard to the federal definition and its multifarious elements."

Paxton claims the state law is "vague" and invalid because there is no federal definition of what an investment adviser representative is.

He says the two securities fraud charges should be tossed because the grand jury that indicted him should have been voided when the presiding judge purportedly asked for "volunteers" who were "willing to serve" on the grand jury.

"Federal courts have consistently held that the use of volunteers improperly un-randomizes a randomly selected venire," the appeal states. "So too should this court. This manipulation of the random process to un-randomize the grand jury was harm per se to Paxton. Absent guidance from this court at this time, every judge will call for volunteers and select grand juries from that pool, rending the recent legislative reforms meaningless."

Paxton's attorney, Bill Mateja with Polsinelli in Dallas, said the latest appeal was filed "to end this improper prosecution," and correct the trial court's mistake.

"Ken Paxton has been charged with a crime that simply doesn't exist, using a grand jury that was improperly impaneled," Mateja said in a statement Tuesday evening.

Special prosecutor Brian Wice disagrees, saying the trial court correctly denied Paxton's motions to dismiss.

"By simply asking for a 'do-over,' Mr. Paxton's petition falls far short of the exacting standard he must meet before the state's highest criminal court will review a court of appeals' decision," Wice told The Dallas Morning News.

Paxton also faces a separate federal securities fraud lawsuit filed by the SEC in April, which mirrors the allegations in his criminal case.

Paxton in June asked a federal judge to dismiss two securities fraud charges against him, calling them "unsupported and legally insufficient." The SEC fired back in July, saying the charges are "rather well-pleaded" and "neither dramatic nor overreaching."

Paxton has blamed his mounting legal troubles on political opponents and President Barack Obama.

Follow @davejourno

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