Paxton empathized with Nate Paul’s distrust of law enforcement because of his own indictment, whistleblower testifies

Whistleblower Mark Penley testifies on Monday, Sept. 11, 2023. Penley was a deputy attorney general for criminal justice under suspended Attorney General Ken Paxton. (Julius Shieh/The Texas Tribune, Julius Shieh/The Texas Tribune)

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On an early morning in September 2020, Mark Penley ruminated on the Bible’s command to “administer true justice” as he prepared to confront his boss, Attorney General Ken Paxton.

By then Penley, the deputy attorney general for criminal justice, had grown deeply concerned that Paxton was being blackmailed or bribed by Nate Paul, the Austin real estate investor who is at the center of Paxton’s impeachment trial in the Texas Senate. In their meeting, Penley told Paxton that he was being misled by Paul, and warned him to “back away” from his friend and donor before it was too late.

But Paxton didn’t listen. Blinded by what Penley said was a deep and well-known distrust of law enforcement stemming from his 2015 securities fraud indictment, Paxton insisted that Paul was the victim of a grand conspiracy and needed their help.

“You don’t know what it feels like to be the target of a corrupt law enforcement investigation,” Penley said Paxton told him.

Penley recalled the exchange from the witness stand on Monday as the second week of Paxton’s impeachment trial began. Penley is the fifth of Paxton’s former deputies-turned-whistleblowers to testify in the trial. Each outlined what they said was a pattern of alarming and criminal behavior by Paxton beginning in 2020, as he allegedly sought to help Paul investigate his perceived enemies as his businesses faced an FBI raid, looming bankruptcies and a litany of related lawsuits.

Paul, House impeachment managers allege, returned the favor by paying for a remodel of Paxton’s home, hiring a woman with whom Paxton was having an affair and maintaining a secret Uber account that Paxton used to meet with the woman behind the back of his wife, Sen. Angela Paxton.

Meanwhile Paxton’s attorneys have framed the suspended attorney general as the victim of a conspiracy and witch hunt, orchestrated in part by the former “rogue employees,” who reported him to the FBI in September 2020. Last week’s deliberations closed with at-times-tense testimony from Paxton’s former top cop David Maxwell, who a Paxton attorney accused of improperly refusing to investigate Paul’s claims and, later, reporting Paxton to law enforcement without substantive evidence.

Penley, who served as Maxwell's second-in-command, took aim at those claims on Monday, telling senators that he repeatedly sought more information about Paul’s allegations — even after they were forensically debunked by agency experts — but found Paul to be uncooperative with their efforts to investigate.

Penley’s testimony shed further light on Paxton’s alleged attempts to help Paul beginning in the summer of 2020, including by having the attorney general’s office investigate Paul’s claims that federal law enforcement had forged a search warrant used to raid his home and businesses in 2019. Paul, Penley said, claimed without evidence that the search warrant initially was for drugs and guns, but was changed to focus on white collar crime after no drugs or guns were found during the raid.

Paul’s claims were “insane” and without “a scintilla of evidence,” Penley testified.

"We saw no merit,” he said. “I thought it was crazy, and I was hoping the attorney general would drop it.”

Penley said he met at least three times with Paul, who he said seemed entitled to the agency’s help even though he would not provide them with information to substantiate his claims, and became increasingly angry when Penley and others pushed back against them.

Paul “acted like we didn't understand who the real boss was,” Penley said. “It wasn’t the attorney general, it was him.”

Paxton was at some of those meetings, Penley said, and grew similarly “unhappy” as his deputies made clear that they believed there was no “legal” or “ethical” basis for the office to become more involved in Paul’s case.

After requesting additional evidence at least five times from Paul, Penley said he did not believe Paul was being honest. On numerous occasions, he said he brought those concerns to Paxton, telling him that he could “get himself in a lot of trouble” if he continued to help Paul.

“This was a very dangerous investigation for him to continue,” Penley said. “There was great risk to him. This could look like bribery."

Paxton, he said, sometimes downplayed the concerns. Other times, he said he sympathized with Paul’s case because of what he believed was his own, unfair treatment by law enforcement. Penley said that Paxton made numerous negative comments about the Texas Department of Public Safety because of his 2015 securities fraud case, which has yet to go to trial.

“He doesn’t trust the director and he feels like they ran a corrupt investigation on him,” Penley said.

Penley said his breaking point came in late September 2020, when he learned that an outside attorney Brandon Cammack — hired at Paxton’s direction to investigate Paul’s adversaries — had served subpoenas on two Austin-area banks involved in Paul’s business disputes.

“I was apoplectic,” he said. “I was furious that this was going on, and that the attorney general was allowing it.”

On cross-examination, Paxton lawyer Mitch Little argued that Penley did not do due diligence on the Paul investigation, much like Paxton’s side claimed during Maxwell’s testimony. Little seized on Penley’s testimony that he “hoped to slow walk” the Paul investigation so that Paxton would lose interest.

Little also pressed Penley on why he did not just call federal prosecutors to vet Paul’s claims against them. Penley said that would have been “high-risk” — Paul was alleging a “grand conspiracy” involving a range of federal authorities and to express any belief in it would have been “crazy.”

Little also zeroed in on the question of what evidence the whistleblowers had when they reported Paxton to the FBI. That became a flashpoint earlier in the trial when whistleblower Ryan Vassar testified he “took no evidence” to the FBI; he later clarified he meant no documentary evidence.

Penley agreed they had “no documents” but he had seen enough “circumstantial evidence” to make him believe Paxton was being bribed.

“This was an initial report by eyewitnesses, and it happened in a hurry,” Penley said.

Little abruptly ended his cross-examination of Penley after pointing out that his notes from the time said Paxton “must be indicted by spring break.” Penley confirmed that, saying he believed at that point Paxton had broken the law.

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