Texas Attorney General Ken Paxton's office assisted with a federal probe involving a major donor who gave the indicted Paxton a $100,000 gift last year to offset his growing legal bill. 

James Webb is the CEO of Preferred Imaging LLC, a North Texas medical diagnostic company that will pay $3.5 million to settle allegations that it improperly billed the government for Medicare and Medicaid services performed without appropriate medical supervision, violating state laws, according to the U.S. Attorney's Office for the Northern District of Texas.

Webb's company admitted no wrongdoing or liability, said U.S. Attorney John Parker. Still, it settled accusations from a former employee who filed the lawsuit and said Webb's company was performing services that require the oversight of a supervising physician without one onsite.

The settlement was reached by federal and state authorities, including the Civil Medicaid Fraud Division within Paxton's agency.

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According to Paxton spokesman Marc Rylander, the U.S. Attorney's Office took the lead on the case because it predominantly involved claims that the federal government was defrauded.

"General Paxton was not involved at all," Rylander said in a statement. "The U.S. Attorney's Office intervened in the case and negotiated a settlement on everyone's behalf. We trust the U.S. Attorney's Office to handle these cases with professionalism and ensure that a fair settlement is reached."

The investigation covered a six-year period — between January 2009 and February 2015. Paxton, who’s facing federal and state securities fraud charges, was elected in November 2014. Dating back to 2012, Webb has donated more than $360,500 to Paxton's campaign for attorney general.