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Texas Attorney General Ken Paxton hangs on politically as criminal trial looms

In less than three months, Texans will watch as their attorney general stands trial on securities fraud charges, facing up to 99 years in prison. Yet Ken Paxton's Republican base is standing by him.

Texas Attorney General Ken Paxton during a news conference on Jan. 12, 2017.

NORTH RICHLAND HILLS — The first slide summed it up neatly: "Attorney General Ken Paxton is the subject of a witch hunt." 

Inside the room, as the subsequent slides flickered by, outlining why the securities fraud charges against the state's top lawyer are all part of a political vendetta, a friendly audience nodded and murmured in agreement. "It's Joe Straus," a woman said under her breath, conjuring the Texas House speaker loathed by certain corners of the Texas GOP.

Eventually, he appeared — Paxton, that is. The mild-mannered attorney general made his way to the stage, following pre-speech programming that included a video testimonial from a friend, former Republican U.S. Sen. Rick Santorum, as well as a plea to call state District Judge George Gallagher's office and urge him to drop the case. Gallagher, one slide said, "can put an end to this at any time." 

"I do want to say this," Paxton said, addressing the elephant in the room. "I don't think anybody's above the law, but everybody deserves the protection of the law, and that's all I would ever ask, and that's all I'm asking for in this case." 

That case has now dogged Paxton for over 18 months, hanging over most of his first term as Texas' attorney general. And yet, for all the rancor, Paxton appears to be surviving politically, a reality reflected here Monday night as he spoke to the NE Tarrant Tea Party, trumpeting his past legal victories over former President Barack Obama, looking forward to the Donald Trump era fully ramping up — and, yes, addressing what one questioner delicately referred to as "your case." 

The public's curiosity over Paxton's legal situation is sure to only increase — both inside and outside rooms like the one he addressed Monday night. In less than three months, Texans will watch as their attorney general stands trial on securities fraud charges, facing up to 99 years in prison. For many, it will be the first time they have heard in any detail about the allegation that Paxton misled investors in a company from before his time as attorney general.

The case goes back to August 2015, when a Collin County grand jury indicted Paxton on two counts of first-degree securities fraud and one count of third-degree failure to register with the state securities board. The most serious allegation is that Paxton, while a state representative, duped the investors in the company, a McKinney technology startup called Servergy, by failing to disclose he was making a commission. The U.S. Securities Exchange Commission brought a similar, civil case against Paxton in April 2016, and while a federal judge dismissed those charges in October, the SEC has kept the case alive by filing amended allegations. 

Paxton and his allies have increasingly argued in recent months that he is the subject of a revenge plot by political foes he made before — and during — the 2014 attorney general's race.  It's a theory that many of his supporters have also adopted — and it could be key to his prevailing in at least the court of public opinion.

"Here’s my general impression as a lawyer: It’s total BS and this has all been cooked up by his political enemies," said Mark Pulliam, a conservative lawyer and commentator from Austin who supports Paxton. 

It was not long ago that another statewide official, former Gov. Rick Perry, found himself under a legal cloud in another high-profile case. That one ended with the abuse-of-power charges against Perry being dismissed — but not before hobbling his 2016 presidential campaign in a way advisers would later describe as fatal.

"One thing is clear," said Tony Buzbee, who was Perry's lead lawyer. "The longer the case drags on, the worse it is politically and the more time the prosecutors have to build a case."

"This case has changed"

In recent months, Paxton's legal battles have grown increasingly personal, complicated and politically charged. But perhaps the simplest distillation of Paxton's view of the charges came in a May 11, 2016, video he sent to supporters.

"It's not a coincidence that the chief witness against me in these charges is a political adversary of mine," said Paxton, alluding to state Rep. Byron Cook, a Corsicana Republican who backed Paxton's rival, Dan Branch, in the contentious 2014 primary for attorney general. "Some folks are still upset that their moderate candidate didn't win." 

Prosecutors are now citing that video as one of several reasons why Gallagher, the presiding judge, should move the case out of Collin County, Paxton's home county. They say Paxton and his allies have tainted the jury pool by waging a "22-month siege" against the people involved in the case — an issue likely to come up Thursday at a pretrial hearing in McKinney. 

"Over the course of almost the last two years ... Paxton's posse of spokesmen, supporters, and surrogates — a clique herein collectively referred to as 'Team Paxton' — has embarked on a crusade clearly calculated to taint the Collin County jury pool," the prosecutors wrote in a filing Thursday. "Team Paxton has utilized every conceivable form of mass media available – radio, television, print, and social media, especially Facebook – to vilify, malign, and defame the Special Prosecutors, the victims in the securities fraud counts, Byron Cook and Joel Hochberg, and, to add insult to injury, this Court."

In both the state and federal cases, Paxton's team has zeroed in more than ever on Cook, seeking to cast doubt on the credibility of a key witness and one of the investors the attorney general is accused of duping. Paxton's allies believe they have their own Exhibit A in a fraud lawsuit a Paxton associate filed against Cook in November, making allegations similar to those Cook has made against Paxton.

"The problem is, when Byron got sued for fraud recently — he and Joel both, the two witnesses in both cases had been sued for fraud — they couldn’t stick to the story because it would implicate them in their own case and so they stepped back and they changed their story again," Paxton said Monday. "So, you know, I don’t really know what the story is anymore. We’ll see what it is at trial."

Cook's lawyer, Terry Jacobson, has denied that his client changed his story or was asked to do so. In court filings, Jacobson has fired back at the fraud lawsuit against Cook as a baseless "attempt to build a narrative that the Witnesses have allegedly engaged in self-dealing." Jacobson has also written that the lawsuit is part of a strategy by Paxton and his allies to try to "uncover as much private information about the Witnesses as possible in order to fuel the negative media blitz." 

Chad Ruback, a Dallas appellate lawyer who has followed Paxton's ordeal, was initially impressed with the strength of the case against Paxton. But he said Tuesday that he believed the prosecutors have since lost momentum, citing their motion to change venue — an unusual move by prosecutors that could mean they do not have the confidence they once did. He also pointed to a Dallas appeals court's decision last month to temporarily block Collin County from paying three Paxton prosecutors, a not insignificant development considering a "case of this magnitude is all-consuming" for legal professionals.

"One thing I can say for sure," Ruback said, "is my opinion of this case has changed." 

Over the past year or so, Paxton's legal battles have coincided with a new period at his office. After a slew of top staffers left in the first few months of 2016, Paxton replaced them with a number of close allies, including religious liberties activist Jeff Mateer and Marc Rylander, a former pastor at the Plano church Paxton attends.

The transition spawned some controversy, with reports surfacing that former top staffers were still getting salaries through a provision known as "emergency pay." The agency and the staffers insisted everything was proper, but the revelations ballooned into a legislative inquiry about the use of emergency leave.

Since the shakeup, Paxton has begun to shed what was once a decisively media-shy reputation. He has become a regular presence on cable news, more active on social media and somewhat more comfortable around reporters. (During a recent event outside the Governor's Mansion, Paxton held an impromptu Q-and-A with reporters who had been lingering nearby to see if Abbott would take questions.)

Paxton has also started to position himself as new President Donald Trump's closest ally among GOP attorneys general — on Wednesday, he became the first state attorney general in the country to issue an amicus brief in support of Trump's controversial travel ban. In public appearances since the election, Paxton has joked people should not worry he won't have anything to do now that Obama is out of office — because he will always have the city of Austin to sue.

Yet even as Paxton has expanded his profile, the legal situation continues to box him in. At a news conference on human trafficking held the same day news of Paxton's May 1 trial date broke, a spokesman bluntly told reporters to keep their questions on topic or they will not get answered. When a reporter nonetheless asked if Texans can expect to have full-time attorney general come May, Paxton balked, saying he is "happy to answer questions later about other topics." The opportunity never arose.

The 30-second pitch

Addressing the tea party group Monday, Paxton appeared much more at ease discussing his legal situation. The presentation that preceded his remarks was direct, featuring clip art of someone with their pants on fire alongside the allegation Cook has changed his story, as well as the appeal to contact Gallagher, along with his office address and phone number.

Asked later by a member of the audience to provide a 30-second pitch for why the cases against him amount to a witch hunt, Paxton initially responded with some humor. 

"Wow, 30 seconds?" he asked. "So much has happened." 

He went on to offer a much lengthier overview of the federal case so far, first noting there are restrictions on what can be publicly discussed regarding the state matter but that the two cases are "virtually the same." His overview included a recollection of arguably the biggest moment in the saga thus far for his team: a court hearing last year in Sherman in which a judge appeared deeply skeptical of the SEC's arguments — and later dismissed the charges in the federal case.

"It was really humiliating. It was awkward to be there watching how badly they did — because they couldn’t answer any questions. The judge just dismantled them," Paxton said of the hearing, which ended up producing only a fleeting joy. While the judge threw out the case, he gave the SEC two weeks to refile allegations and they did, keeping the charges alive to this day. 

When he first saw the federal charges, Paxton recalled, he asked his lawyer if he had ever seen such a securities fraud case in which "no one had been lied to and no one had lost money."

"He said, 'Never,'" Paxton recalled. "I said, ‘Well, then how can they bring this case against me?’ He said, ‘How many times have you sued Obama?' And I said 13. And he said, 'Well, they’re suing you back.'"

In the audience, heads just kept nodding. 

Eyes on 2018

For Paxton's team, the biggest political challenge has remained the most obvious one: beating the charges. One source of optimism for Team Paxton has been the hurdles the charges have faced at the federal level, where they have already been dismissed once. "The fact that it's gone so well in the civil case tells you all you need to know about the state case," Paxton told the tea party activists.

But legal experts caution that the judge in the federal case is looking at a different standard than the one in the state case, even if the allegations are very similar. And even Paxton seemed to acknowledge as much Monday, expressing some frustration that he has "never been able to get a judge to rule on the law" in the state matter.

In any case, Paxton's team is exuding confidence in both his legal outlook and his political outlook. If he avoids a conviction — which could cause him to lose his law license but not necessarily force him out of office — his next big challenge will be a 2018 re-election campaign that will likely be getting underway with the securities fraud charges still fresh in the headlines.

"There’s a proverbial saying for what Ken Paxton is going through right now...'You can beat the wrap, but you can’t beat the ride,'" Paxton campaign spokesman Matt Welch said in a statement. "Thankfully, this politically-driven ‘ride’ is about to come to an end. The truth behind the political motivation and conduct on the part of some of these players will be revealed during the trial and taxpayers aren’t going to like what they will see." 

"While I’m sure that liberal Democrats, some moderate Republicans and a few media outlets are wishing for Ken Paxton’s defeat, he will prevail both in the courtroom and at the ballot box," Welch added. "The facts, the law, and the people of Texas are on his side."

To Texas Democrats, Paxton is the poster boy for what they see as a corrupt Texas GOP that is chasing issues that appeal to only a small slice of the electorate. Democrats have already suggested Paxton's seat will be high on their target list for 2018, along with that of Agriculture Commissioner Sid Miller. 

"Texas Republicans are focused on the wrong things," U.S. Rep. Joaquin Castro, D-San Antonio, said in an interview last month. "Elected officials from Sid Miller to Ken Paxton, who’s under indictment, to Dan Patrick, who’s on an ideological crusade — these don’t represent the values and opinions of most Texans." 

With several months to go until potential statewide office candidates are expected to make their intentions clear, no one has emerged in a serious way as a Paxton challenger, either on the Democratic or Republican sides. Paxton undoubtedly has critics within his own party, but they have treated his legal troubles with public silence, and few signs have surfaced that there is an organized movement against him.

Paxton has proven to be a strong fundraiser despite his legal woes, taking in $1.9 million in the second half of last year — by far his biggest six-month haul since he took office. And he has $4.6 million in the bank, the most reserves held by any statewide official beside the two most powerful — the governor and lieutenant governor. 

Paxton's fellow GOP officeholders are far from eager to weigh in specifically on his legal troubles, but none have turned on him or overtly distanced themselves. Gov. Greg Abbott, Paxton's predecessor, has said he has full confidence in Paxton's ability to serve, and he has continued to appear with him at public events — including at a Collin County GOP dinner Saturday where Paxton introduced Abbott.

As Paxton's legal problems have dragged on, some Republican officials have even grown more supportive, if carefully so. That was evident last week on the steps of the Capitol, where Lt. Gov. Dan Patrick spoke alongside Paxton and suggested support for the idea that the embattled attorney general has been targeted.

"When you're one of the men and women up here who stands for the word of Christ, those on the left who would oppose you, those in the secular world who would oppose you, are looking to take you down to size," Patrick said. "They're looking to see how you respond in the good days and how you respond in turmoil, how you respond in trouble. ... We're seeing someone, a family, respond in turmoil and trouble, in Angela and Ken Paxton. My heroes.”

Disclosure: Tony Buzbee has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here

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