After winning impeachment fight, Paxton still faces felony fraud case and an FBI investigation

Texas Attorney General Ken Paxton leaves the courtroom on Aug. 3 after appearing in the felony securities fraud case against him at the Harris County Courthouse in Houston. (Reginald Mathalone/Nurphoto Via Reuters, Reginald Mathalone/Nurphoto Via Reuters)

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After a 10-day trial, Texas senators on Saturday voted to acquit Texas Attorney General Ken Paxton on allegations of bribery and corruption, clearing him to return to his duties as the state’s top lawyer.

But Paxton’s legal troubles are not over.

He still faces state securities fraud charges, a case that has stretched out for eight years and counting, starting with an indictment just months after he took office in 2015. The case has been delayed for years by pretrial disputes — including a back-and-forth battle over the trial venue that saw it moved to Houston from Collin County, which Paxton represented as a state lawmaker.

And Paxton has been under investigation by the FBI since October 2020, although no charges have been filed.

Federal investigators began their investigation after several top Paxton deputies went to the FBI and alleged the attorney general had committed crimes, including bribery, while trying to help his friend and political donor, Austin real estate developer Nate Paul. Justice Department prosecutors who typically handle high-profile public corruption cases took over the case in February.

Federal law experts and former prosecutors contacted by The Texas Tribune say the impeachment result isn’t likely to alter the course of Paxton’s securities fraud case. As far as the FBI investigation, they said, witness testimony in the impeachment hearings could help federal officials evaluate the strengths and weaknesses of their case.

In the state case, Paxton faces two counts of securities fraud, a first-degree felony that carries a punishment of up to 99 years in prison, stemming from his 2011 efforts to solicit investors in Servergy Inc. without disclosing that the McKinney tech company was paying him to promote its stock. Paxton also faces one count of failing to register with state securities regulators, a third-degree felony with a maximum punishment of 10 years in prison.

Speaking to reporters after Saturday's Senate vote, Paxton attorney Dan Cogdell called for the securities fraud case to be dismissed, saying it and the impeachment trial were both “B.S.”

“That case, like this one, should have never been brought,” he said. “They ought to dismiss it. And if they don’t dismiss it, we will try them and beat them there just like we beat them here.”

Sandra Guerra Thompson, a former New York City prosecutor who teaches criminal law at the University of Houston Law Center, said Paxton’s victory in the impeachment trial likely means his state criminal case will continue on its present trajectory.

“The same motivation to try to delay [the case] would continue from his perspective, and the prosecutors would have the same motivations to move forward,” she said. “It's very perilous for a public official to have charges like that against them. Because even if you get them reduced to a misdemeanor, they’re still crimes of moral turpitude. So it's problematic.”

A conviction, she said, would have made a plea agreement more likely because prosecutors would have less urgency to take the case to trial in an effort to remove him from office.

Last month in a Houston courtroom before a new judge, defense lawyers and prosecutors agreed to return Oct. 6 to deal with pending motions and set a trial date.

“At some point, it has to come to an end,” special prosecutor Brian Wice told reporters afterward. “I think today was the first step in a journey of a thousand miles to make sure that justice ultimately comes to be.”

Susan Klein, a former federal prosecutor with the U.S. Attorney’s Office and currently the Alice McKean Young Regents Chair in Law at the University of Texas School of Law, said she doesn’t see the impeachment trial having an impact on the state criminal case.

“I don't see how this impeachment has any effects on any of the criminal cases, to be frank, he's not testifying (in the impeachment), which is smart,” she said.

Regardless of the impeachment outcome, she said, if Paxton can continue dragging out the state criminal case, “I think that is better for him” because he could then make an argument that his right to a speedy trial was violated.

“You can't have a trial 10 or 12 years after the event,” she said. “That's why they have statute of limitations. Witnesses forget things, and the defendant has a right to a trial.”

In the federal case, the FBI was undoubtedly following the testimony at the state Capitol as the House impeachment managers called a number of witnesses, including former Paxton deputies-turned-whistleblowers, said Michael Bromwich, senior counsel at Washington, D.C.-based Steptoe law firm and a former Justice Department inspector general.

Bromwich represented former FBI Deputy Director Andrew McCabe during the Trump-Russia investigation and represented Christine Blasey Ford, the California professor who alleged she was sexually assaulted by Supreme Court Justice Brett Kavanaugh. He said nobody knows what evidence the FBI and Justice Department have assembled against Paxton, and evidence presented in the impeachment trial could give them more ammunition for their case.

It’s also an opportunity to evaluate potential witnesses, he added, “because they've now seen, among other things, how some of their key witnesses will actually perform in delivering their testimony, whether they come across as credible, whether they come across as biased or prejudiced against Attorney General Paxton.

“So I think that it could possibly affect how strong they think their criminal case would be,” he said.

According to the Associated Press, federal prosecutors and a grand jury heard testimony from witnesses including Drew Wicker, who served as Paxton’s former personal aide and testified during the impeachment trial that he heard Paxton and a contractor discuss the cost of proposed changes to the renovations at Paxton’s Austin home.

Wicker testified that he grew increasingly uneasy with Paxton’s behavior in 2020 — particularly with his close relationship with Paul.

Robert Downen contributed to this story.

Disclosure: University of Houston has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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