Ken Paxton fraud trial set for May


Highlights

After 3 courts reject his bid to toss out criminal charges, Ken Paxton’s trial will start May 1.

Attorney general is accused of fraud in private business deals from 2011.

Texas Attorney General Ken Paxton’s criminal trial on securities fraud charges will begin May 1.

The Collin County trial is expected to last two to three weeks, after which Paxton should know whether he can remain in office or, with a guilty verdict, whether he will spend time in prison or on probation for actions related to private business deals in 2011 and 2012.

Under indictment for 16 of the 24 months he has been attorney general, Paxton’s case was delayed when his lawyers pressed to have the charges dismissed before trial.

Three courts rejected those efforts, most recently the Texas Court of Criminal Appeals in October, and the case was returned to state District Judge George Gallagher, who scheduled the trial and also set aside four days for jury selection to begin April 20.

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Paxton’s trial will occur just as the Legislature begins its frantic final month and shortly before politicians turn their attention to the 2018 primary elections. Paxton recently announced that he will enter primary season with almost $4.6 million in his campaign account after raising about $2.7 million in 2016 — a signal to potential Republican challengers that he will be a formidable foe if he emerges from trial with a not-guilty verdict.

“We’re delighted that the matter is set for trial,” defense lawyer Dan Cogdell said. “We’re anxious to begin trial and we’re confident that the right result will happen and Ken will be acquitted.”

“We’ll be ready,” prosecutor Brian Wice said.

In his first public appearance since news of the trial date broke, a previously scheduled Thursday afternoon news conference on efforts to combat human trafficking, Paxton declined to answer reporters’ questions about the legal case.

In early August 2015, prosecutors revealed that a Collin County grand jury had charged Paxton with two counts of securities fraud for soliciting investors in Servergy Inc. in 2011 without revealing that the McKinney tech company was paying him to push its stock.

The first-degree felonies carry a maximum punishment of 99 years in prison, though probation isn’t uncommon in such white-collar cases.

Paxton also was charged with failing to register with state securities regulators in 2012, a third-degree felony with a maximum 10-year prison sentence.

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Among the witnesses expected at Paxton’s trial will be the investors he was accused of defrauding — state Rep. Byron Cook, R-Corsicana, and Florida businessman Joel Hochberg — as well as the Texas Rangers involved in the criminal investigation, Cogdell said.

The U.S. Securities and Exchange Commission also filed a civil lawsuit accusing Paxton of fraud for allegedly failing to disclose that his stock tips were “bought and paid for” by Servergy. According to the SEC, Servergy gave Paxton 100,000 shares of stock, valued at $1 a share, after he raised $840,000 from Cook, Hochberg and three other investors.

A federal judge tossed out the SEC complaint in October, saying the agency’s allegations weren’t recognized under federal securities law, but the SEC amended and refiled it two weeks later.

U.S. District Judge Amos Mazzant III hasn’t yet ruled on Paxton’s request to dismiss the amended complaint, which sought fines and an order for Paxton to repay “ill-gotten gains” from the Servergy deals.

Additional material from staff writer Katie Hall.



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