Texas AG Faces Bribery Probe for Taking $100K Gift

DALLAS (CN) – A Dallas-area district attorney confirmed Thursday her office is investigating embattled Texas Attorney General Ken Paxton for accepting a $100,000 gift from the leader of a company that was being investigated for Medicaid fraud.

Kaufman County District Attorney Erleigh Wiley, a fellow Republican, told The Dallas Morning News she is looking into whether Paxton violated state laws that limit gifts public servants can receive from people under their jurisdiction.

She cited “great cooperation” from Paxton’s attorneys and the Texas Rangers, saying she is close to deciding whether to present a case to a grand jury.

“There is an active investigation looking into that matter,” Wiley told the newspaper. “We are carefully and thoroughly going through every piece of evidence.”

Wiley was appointed to the case by a regional administrative judge after it came to light that Paxton accepted the gift from James Webb, head of Preferred Imaging LLC, in 2015.

Federal prosecutors announced in July 2016 that the Dallas-based company would pay $3.5 million to resolve a whistleblower’s False Claims Act and Texas Medicaid Fraud Prevention Act claims that it engaged in improper billing.

Preferred Imaging admitted no wrongdoing in the settlement. The U.S. Department of Justice acknowledged at the time the Texas Attorney General’s Civil Medicaid Fraud Division for helping in the investigation.

The Texas Penal Code forbids public servants from accepting “any benefit from a person the public servant knows to be subject to regulation, inspection or investigation by the public servant or his agency.”

Paxton denied at the time of the settlement any violation of the gift rules of his office, saying there was no investigation of the company because the division “never received a referral.”

Paxton spokesman Matt Welch said Thursday that the attorney general’s office has “fully cooperated” with Wiley’s investigation.

“Attorney General Paxton’s personal finance statement fully complied with Texas ethics laws and has been thoroughly vetted by legal counsel who are ethics experts,” Welch said in a statement. “Despite irresponsible media speculation and wishful thinking by political opponents, all donations given to the Paxton legal defense effort are in full compliance with state law.”

Paxton’s legal costs have mounted as he awaits trial on two first-degree felony counts of securities fraud and a third-degree felony count of failing to register with a state securities regulator dating back to his time in the Texas House of Representatives in 2011. He faces up to 99 years in state prison if convicted.

Preferred Imaging’s settlement came five months after the Texas Ethics Commission narrowly rejected an advisory opinion that would have allowed Paxton to use out-of-state donations to fund his legal defenses. If approved, the opinion would have allowed Paxton’s employees to avoid the gift laws by accepting a “benefit” from a donor with no ties to the state and who is not subject to the commission’s jurisdiction.

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