Court

Ken Paxton’s securities fraud trial in Houston on hold until after Texas Senate impeachment trial

In addition to state securities fraud charges, suspended Texas Attorney General Ken Paxton faces the possibility of federal charges for abuse of office, growing out of the same allegations that led to his impeachment.

Ken Paxton Impeachment Press Conference
(AP Photo/Eric Gay)
Texas state Attorney General Ken Paxton makes a statement at his office in Austin, Texas, Friday, May 26, 2023.

The felony securities fraud trial of suspended Texas Attorney General Ken Paxton won't begin until after his impeachment trial concludes, if then. If the Texas Senate removes Paxton from office, he may be more inclined to try to settle the fraud charges in an effort to keep his law license.

Paxton appeared in a Houston courtroom Thursday for the latest hearing in his securities fraud case, but he did not speak. He and all other parties relating to his pending impeachment trial are under a gag order from Lt. Gov. Dan Patrick.

Judge Andrea Beall set the next hearing date for Paxton's securities fraud trial for Oct. 6. At that time, she said she would set a start date for the trial itself. She will also address issues raised by the defense for the need for a speedy trial as well as issues raised by the prosecution team regarding their payment.

Paxton has been under indictment since July 2015 relating to allegations that he defrauded investors in a tech startup he was involved in called Servergy, Inc. prior to his election as attorney general. The special prosecutors in the case, Kent Schaffer and Brian Wice, said they have not been paid for their work since 2016.

"The one thing everybody agrees on is that the commissioners in Collin County will have to write the check," Wice said. "And make no mistake. One of the reasons for the eight-year delay is that they were incredibly clever and Machiavellian ... about knowing the only way they could derail this prosecution, the only way they could stop Kent and I in our tracks, was to defund us."

Paxton's impeachment trial in the Senate is scheduled to begin Sept. 5. The attorney general faces 20 articles of impeachment on charges including disregard of official duty, constitutional bribery and obstruction of justice, among others. Many of those charges relate to favors Paxton allegedly provided to a friend and political donor, Austin real estate investor Nate Paul. Paul has since been arrested on federal charges of making false statements to financial institutions.

Wice indicated Paxton might be more inclined to seek a deal in his securities fraud case if the Senate convicts him in the impeachment trial.

"If he rolls the dice (on the securities fraud case) and goes to trial and gets convicted, even if he gets probation, he will lose his ability to practice law," Wice said.

Dan Cogdell, Paxton's defense attorney, sounded a more optimistic note. But he, too, raised the prospect that Paxton might seek to avoid a conviction on securities fraud charges if the Senate permanently removes the attorney general from office.

"Logically, if Ken prevails (in the impeachment trial), we'll go forward," Cogdell said. "If Ken loses, that's a kill shot to his political career, so it opens the door for resolution that's not open right now."

In addition to the state securities fraud charges, Paxton is also under federal investigation for alleged abuse of office, relating to the same issues that led to his impeachment. Wice said any resulting federal charges could be far more serious.

"I think if in fact the feds indict him," Wice said, "on some level, we may become footnotes. If you're looking at substantial time in a federal penitentiary, where there's a conviction rate of 98% and 98% of all people who are charged plead guilty, I think that that's going to take center stage, and that would ultimately relegate (the securities fraud case) to a second act."