Securities fraud trial avoided for Paxton as he strikes deal

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Texas Attorney General Ken Paxton speaks during the Conservative Political Action Conference, CPAC 2024, at the National Harbor in Oxon Hill, Md., Friday, Feb. 23, 2024. Paxton beat impeachment and now he wants political revenge. (AP Photo/Jose Luis Magana, File)

In a deal that allows him to avoid a possible lengthy prison sentence if convicted, Texas Attorney General Ken Paxton has agreed to meet certain conditions in exchange for prosecutors dismissing criminal securities fraud charges lodged against him nearly a decade ago.

Those conditions include his performance of 100 hours of community service and 15 hours of legal ethical education courses. He would also be required to pay $270,000 in restitution to drop the charges and end the case that was expected to go to trial in just a few short weeks on April 15.

Instead, as the Dallas Morning News reported, should he fulfill his obligations under the terms in the next 18 months, the charges won’t appear on his record. Important to note: the agreement does not mean Paxton has admitted any guilt to the charges.

A lawyer for Paxton, Dan Cogdell, stressed this to the local outlet saying that once the terms are complete, “the case will end without any admission on his part or any finding of guilt — because he’s not guilty of anything in this case.”

The charges stemming from 2015, which include dual felony counts of securities fraud and a single charge of failing to register as an investment adviser, accused Paxton of defrauding investors by persuading them to pour their money into a Texas-based technology company known as Servergy — but without registering or allegedly telling his prospects that he would earn a commission on their investment.

Two such investors were former Texas state Rep. Byron Cook and Joel Hochenberg, a now-deceased business owner. Part of Tuesday’s agreement means that Paxton will pay the $270,000 to Cook and to Hochenberg’s estates.

The state attorney general was facing a steep potential prison sentence if convicted on all charges: The maximum allowable sentence for first-degree securities fraud is 99 years.

Paxton remains under investigation for corruption despite this development.

As Law&Crime previously reported, former Deputy Attorney General for Criminal Justice Mark Penley, former Deputy Attorney General for Policy and Strategy Initiatives Blake Brickman, former Deputy Attorney General for Legal Counsel Ryan Vassar, and David Maxwell, the former director of the Office of Attorney General’s (OAG) enforcement division — sued Paxton in November 2020 for wrongful termination after they accused him of bribery and other crimes.

They have argued that one of Paxton’s donors, Natin “Nate” Paul had undue influence over the state attorney general. Paul was indicted last June on eight counts of financial fraud, including allegedly making false statements on loan application forms not just in Texas but in New York, Connecticut and Ireland as well. Paxton has denied any wrongdoing in this case.

Questions over this relationship paved the way to his impeachment in the Texas House of Representatives but the state’s senate acquitted him.

The Dallas Morning News reported from the courtroom Tuesday that Paxton was largely mum at the hearing before Judge Andrea Beall, who rebuffed attempts by Paxton’s attorney to dismiss the case completely and indicated she was ready to proceed.

But that was before the parties announced they had reached a deal.

“No judge can force a prosecutor to put on evidence,” she remarked.