Texas AG Paxton Balancing Legal Troubles Ahead of 2022 Primary

AUSTIN, Texas — Ahead of what is set to be a challenging primary contest before his 2022 reelection campaign for Attorney General of Texas, Ken Paxton is still wrestling with legal troubles that have plagued him since before he held the office.

Paxton, a former state House member and Senator, has been under indictment since 2015 on a pair of securities fraud charges and one count of failing to register with the Texas State Securities Board as an investment adviser. The securities fraud charges stem from private business deals in 2011 and 2012 in which Paxton sold shares of Servergy Inc. to investors without disclosing the tech company was compensating him for the work.

The fraud charges constitute first-degree felonies and carry a maximum sentence of 99 years in prison. In addition, a whistleblower suit was filed against Paxton last year by several of his former top aides who allege he took part in improper influence, abuse of office and bribery among other potential crimes.

Texas Land Commissioner George P. Bush alluded to Paxton’s legal troubles when announcing his primary bid for Attorney General. Bush, the son of former Florida Gov. Jeb Bush, has served as commissioner of the Texas General Land Office since 2015 and announced his candidacy in June and has already secured numerous high-profile endorsements from former Secretary of State James Baker and the National Border Patrol Council.

“Voters have a right to know what their elected officials are up to,” Karina Erickson, communications director for Bush’s campaign, told The Well News. “Ken Paxton has abused his office and lost complete trust of the voters of Texas. Commissioner Bush is not running against one person but on a set of ideas. His top priorities are restoring integrity back to the Office of Attorney General, protecting our borders and elections, standing up to the federal government to protect Texans’ constitutional liberties, and defending and standing with law enforcement.”

Paxton is also challenged by former Texas Supreme Court Justice Eva Guzman and Texas House Rep. Matt Krause. Guzman served on the state Supreme Court from 2009 to 2021 after initially being appointed to the court by then-Gov. Rick Perry, while Krause has served in the state House of Representatives since 2013.

After her appointment to the court, Guzman won her 2010 and 2016 elections before resigning in June with more than a full year left in her second six-year term. After officially announcing her candidacy for attorney general, Guzman raised more than $1 million in the first 10 days of her campaign.

Krause, who launched his campaign in September, had solidified his position as an ally of Paxton’s in the Texas House after twice endorsing him in 2014 and 2018, but has since walked back his support. Like Paxton’s other primary opponents, Krause has insinuated publicly that the allegations against Paxton were a legitimate enough concern to announce his primary bid against the incumbent attorney general.

Although Paxton has maintained publicly that the allegations made against him are politically motivated, he is reportedly under FBI investigation for the claims. Paxton’s defense lawyers contend that the plaintiffs in the suit lack the standing to sue him because Texas’s Whistleblower law pertains to “[state] employees, appointed officers, and governmental entities,” while Paxton — as an elected official — is immune to its statutes.

“The Texas Legislature passed the Texas Whistleblower Act in 1983 to prevent the very conduct by Attorney General Ken Paxton that forms the basis of this case,” the plaintiffs wrote in the petition filed in the lawsuit. “The most senior members of the [Office of the Attorney General] believed in good faith that Paxton was breaking the law and abusing his office to benefit himself as well as his close friend and campaign donor, Austin businessman Nate Paul, and likely the woman with whom, according to media reports, Paxton has carried on a lengthy extramarital affair.”

At least 16 business entities controlled by Paul or his company have filed for bankruptcy protection, leading lenders to initiate foreclosure proceedings on over $250 million in delinquent debt held by dozens of his companies, the plaintiffs allege in their petition.

Further, the plaintiffs contend in the suit that Paul created a company in 2020 solely for the purpose of suing a local charity, its lawyer and a court-appointed receiver. In that case, a district judge dismissed Paul’s lawsuit on the grounds that it was filed for the purpose of harassment and then ordered his company and lawyer to pay $225,000 for the “frivolous and malicious use of the justice system.”

The plaintiffs in the suit contend that Paxton abused his office by using “the personnel, legal authority and other resources of the OAG to advance the legal and personal interests of Nate Paul and his business activities.”

Paul made formal written requests to the Texas Attorney General’s office for investigations of the federal magistrate judge who issued warrants authorizing searches of Paul’s offices and homes, the law enforcement agents who conducted the searches, and the assistant United States attorney who obtained the search warrants from the magistrate judge. The plaintiffs assert that Paxton fulfilled Paul’s requests because of their personal relationship and because Paul is a major donor to Paxton’s campaign.

These actions amount to a violation of Texas laws regarding bribery, improper influence and abuse of office, according to the plaintiff’s petition. Also, the plaintiffs allege Paxton personally intervened in open records requests related to the search of Paul’s properties in addition to intervening in civil litigation and directing a legal opinion to benefit his friend and political donor.

“These same individuals are some of the state and nations’ top Christian, conservative attorneys,” Erickson said in a written statement obtained by The Well News. “This isn’t a personal matter; this is about restoring integrity and leadership to the attorney general’s office.”

After concluding that Paxton was using the resources and authority of his office to benefit the financial and personal interests of Paul, the whistleblowers issued reports of the activity to “appropriate law enforcement authorities,” according to the petition. The plaintiffs also allege Paxton retaliated against them for their report by terminating their positions in the office and continually smeared them publicly when the news broke.

“Paxton responded to the report immediately and with ferocity, as though he was trying consciously to show Texans exactly what retaliation against whistleblowers looks like,” the plaintiffs contend in their petition. “Paxton falsely smeared the whistleblowers publicly in the manner calculated to harm them most, threatened them, tried to intimidate them, and engaged in all manner of retaliation ranging from serious to petty to pathetic.”

The petition continues, “Then, within about a month of learning of their whistleblowing, Paxton and his OAG fired several of the plaintiffs. Less than six weeks after they reported Paxton’s wrongdoing, only one of the whistleblowers remains employed at the OAG, and even he has been stripped of all responsibility, placed on leave, and constructively discharged. It is hard to imagine more flagrant violations of the Texas Whistleblower Act.” 

Reece can be reached at [email protected].