Texas AG Denies Securities Fraud Charges

     FORT WORTH, Texas (CN) – Texas Attorney General Ken Paxton pleaded not guilty to felony securities fraud charges during his first court appearance Thursday morning.
     Paxton, 53, appeared before State District Judge George Gallagher at the Tim Curry Criminal Justice Center in Fort Worth after the judge denied Paxton’s motion to have his attorneys enter his plea for him. He was indicted last month 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 Texas State Securities Board.
     The charges go back to 2011, when Paxton was a member of the Texas House of Representatives.
     Paxton 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 this past 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 carries a sentence of five to 99 years or life in state prison if convicted; the failure to register charge is punishable by two to 10 years in state prison if Paxton is convicted.
     He 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 already been given 100,000 shares in the company and that he had not invested in the company himself, according to the indictment.
     During the 30-minute hearing, Gallagher granted Paxton’s motion for the withdrawal of his attorney, Joe Kendall in Dallas. The judge gave Paxton until Sept. 3 to hire a replacement.
     Citing the intense media coverage of the case, Kendall asked the judge to consider moving the case back to Collin County.
     “We do not want to try this case in the media,” Kendall said.
     The hearing was Paxton’s first appearance since he was booked at the Collin County jail on Aug. 3. A controversy arose when Gallagher exempted Paxton from wearing a white towel around his neck and shoulders, which is required for all booking shots in Collin County.
     Gallagher purportedly ordered Sheriff Terry Box not to use a towel in Paxton’s photo. Paxton was released on $35,000 bail.
     Paxton said he is “innocent of these charges” several hours after the hearing.
     “It is a travesty that some would attempt to hijack our system of justice to achieve political ends they could not accomplish at the ballot box,” Paxton said in a statement. “Regardless, I will continue to serve the people of Texas as attorney general and continue to fight for the freedoms guaranteed under our Constitution.”     
     Paxton’s fellow Republican have offered tepid support since his indictment. Democrats have repeatedly called for his resignation.
     Manny Garcia, deputy executive director of the Texas Democratic Party, said Thursday the “trust between Paxton” and Texans “has been broken.”
     “This is yet another example of the Republican culture of corruption that festers within one-party rule,” Garcia said in a statement. “Texans are now left wondering, ‘How can the attorney general of Texas act as the state’s chief law enforcement official when he himself is facing 99 years in jail for his crimes?'”

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