Watchdogs Demand Info on Texas AG Candidate

AUSTIN (CN) - An attorney watchdog group sued the Texas State Securities Board for documents it claims will show that Texas attorney general candidate Kenneth Paxton broke the law.

The Texas Coalition on Lawyer Accountability sued the Securities Board and its Commissioner John Morgan in Travis County Court on Sept. 17.

The coalition, a 501(c)(3) nonprofit, asked the board in August for documents on disciplinary action taken against Kenneth Warren Paxton Jr., a McKinney attorney, Republican state senator, and candidate for attorney general in the Nov. 4 election.

The board denied the request on Sept. 5, citing confidentiality laws.

Plaintiff Erica Gammill, acting director of the coalition, filed a grievance with the State Bar of Texas against Paxton in August, claiming he violated professional conduct rules and that Morgan disciplined him for admitting he acted as an investment adviser representative without registering with the board.

"Mr. Paxton also violated Disciplinary Rule 8.04(a)(3) by taking secret, illegal kickback-commissions for referring his clients and their families to Frederick Mowery and Mowery Capital Management, LLC, and receiving 30 percent of all investment-advisor fees that Mowery charged them," the 14-page complaint states. "Therefore, the TSSB documents are directly relevant to that disciplinary complaint and the underlying conduct, and that constitutes good cause under § 28 of the [Texas Securities] Act."

Paxton is not a party to the lawsuit.

The complaint claims that Paxton urged one of his clients, nonparty Teri Goettsche, to hire Mowery and his company to manage her financial investments. She allegedly hired Paxton to prepare a post-nuptial agreement with her husband.

"By admitting that he failed to register as required by the Texas Securities Act, Mr. Paxton admitted to facts that constitute a third-degree felony under § 29I of the Texas Securities Act," the complaint states. "Mr. Paxton shared offices with Mowery, both in Dallas and in Collin County. Mr. Paxton was well aware of Mowery's tenuous financial condition at the time. Yet when Mowery foreseeably went bankrupt thereafter, Mr. Paxton concealed that information from the Goettsches."

The coalition claims that it and state voters deserve access to the records "that shed light on Mr. Paxton's unethical acts and unlawful conduct."

"Any person who wants to occupy the high office of Texas attorney general should exhibit the highest standard of personal and professional integrity," the complaint states. "To the extent that Mr. Paxton apparently falls far short of that standard, the voters are entitled to know exactly what he did that forms the basis of the complaint against him. Indeed, if Mr. Paxton favors transparency, honesty, and an informed electorate, he should join in plaintiffs' request that the TSSB release the documents requested."

The Securities Board could not be reached for comment Sunday.

Paxton spokesman Anthony Holm said Gammill was not "credible" or "legitimate."

"This is yet another shenanigan by liberal Democrat activists trying to prop up their failing Democrat nominee," Holm told the Houston Chronicle. "What's striking is the collusion between these liberal groups as they peddle blatantly false information. For example, these activists claim this politically driven lawsuit is needed to support their prior frivolous complaint, even though that complaint has been dismissed."

Holm apparently was referring to Gammill's August complaint to the state bar, and to the Austin-based Texans for Public Justice, which has asked the Travis County District Attorney to investigate whether Paxton committed a felony.

The coalition seeks an order and writ of mandamus requiring disclosure of the documents. It is represented by Jason Panzer, with Knisely Prehoditch in Austin.

Follow @davejourno

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