Ken Paxton’s securities fraud trial will remain in Houston, court rules

Texas Attorney General Ken Paxton giving a speech in the Senate chamber during his swearing-in ceremony in January. (Bob Daemmrich For The Texas Tribune, Bob Daemmrich For The Texas Tribune)

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Texas’ highest criminal court ruled Wednesday that the securities fraud case against now-suspended Attorney General Ken Paxton’s should remain in Houston, settling a key issue in the 8-year-old case as Paxton faces an impeachment trial in the Texas Senate this summer.

The Texas Court of Criminal Appeals, in a 6-3 ruling, overturned lower-court decisions that said Paxton’s trial had been improperly moved from Collin County, where he lives, to Harris County because the trial judge had lost jurisdiction over the matter.

However, the Texas Constitution and state law protected the judge’s authority over the case, the court ruled.

“We’re gratified but not surprised that the Court recognized that this defendant must stand trial before a Harris County jury and a judge who will follow the law,” prosecutor Brian Wice said.

Paxton’s defense team did not immediately respond to a request for comment.

In 2015, a Collin County grand jury indicted Paxton on two counts of securities fraud, a first-degree felony with a punishment of up to 99 years in prison, and one count of failing to register with state securities regulators, a third-degree felony with a maximum 10 years in prison.

[“These allegations are completely untrue”: Paxton attorney Tony Buzbee promises vigorous defense in Senate trial]

The securities fraud charges relate to Paxton’s efforts in 2011 to solicit investors in Servergy Inc. without disclosing that the McKinney-based tech company was paying him to promote its stock.

Paxton, who was suspended from acting as attorney general when the Texas House voted to impeach him late last month, has said he did nothing wrong and dismissed the charges as motivated by his political rivals.

Prosecutors were able to remove the case from Collin County in 2017, arguing that they could not get a fair trial in a county that Paxton had represented during his 10 years in the Texas House and two years in the state Senate.

Paxton’s lawyers, arguing that the judge who ordered the case to Harris County had lost jurisdiction over the case, succeeded in sending the case back to Collin County in 2020, leading to appeals from prosecutors that resulted in Wednesday’s ruling.

Where a trial is held could have implications for the jury pool in a criminal trial. Collin County leans Republican, and 51% of voters supported Donald Trump, compared with 47% for Democrat Joe Biden, in 2020. In contrast, Harris County voted 56% to 43% for Biden over Trump.

The delay over the venue change was one of multiple holdups in the long-delayed securities fraud case. Paxton’s defense team had also tried to get the charges dismissed, citing problems with the grand jury process. Another dispute arose over six-figure payments to the appointed prosecutors, also leading to extended appeals.

The latest issue involved orders that assigned state District Judge George Gallagher to the Paxton case after another judge had stepped aside. One of those orders allowing him to serve as a traveling judge expired on Jan. 1, 2017.

Paxton’s lawyers argued that because Gallagher moved the case to Harris County in March 2017, he no longer had authority over the matter, voiding his order. A Harris County trial judge and an intermediate appeals court agreed.

On Wednesday, the Court of Criminal Appeals said Gallagher, as an active district judge, “had constitutional authority to sit in any district court across the state” after he was properly appointed to handle the case in July 2015.

“Judge Gallagher had authority to sit in the 416th District Court to preside over [Paxton’s] case when he issued the venue transfer order on April 11, 2017,” Judge Bert Richardson wrote for the majority. “To hold otherwise, would erroneously limit the constitutional statewide authority vested in duly elected district court judges by the Texas Constitution.”

Presiding Judge Sharon Keller and Judge Mary Lou Keel dissented, arguing that Gallagher had not been properly assigned to Paxton’s case because the recused Collin County judge had not agreed to let Gallagher sit in his court, as required by the Texas Constitution.

“The Constitutional provision appears to require mutual consent — one district judge can sit for another if both consent. Here, mutual consent was lacking,” Keller and Keel wrote.

Judge Kevin Yeary issued a separate dissenting opinion, arguing that Gallagher lacked the authority to change the venue to Harris County.

Wednesday afternoon, Tony Buzbee, Paxton's lead impeachment lawyer, questioned the timing of the ruling.

“This case has been before the Court of Criminal Appeals for nearly two years and the timing of today’s decision was no coincidence [—] specifically timed and designed to create maximum negative press and political damage to the Attorney General and targeted to hurt him with the Senate,” Buzbee said in a statement.

Paxton's impeachment trial before the Senate has not yet been scheduled, though senators approved a resolution saying it will begin no later than Aug. 28. The Senate is scheduled to discuss rules for trial on Tuesday.

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