Out-of-state ad roils Texas attorney general race

A Virginia nonprofit has poured more than a half-million dollars into a new TV ad that sharply criticizes Texas attorney general candidate Ken Paxton for taking “kickbacks” that led to a recent reprimand from Texas securities regulators.

Airing in the closing days of the Republican runoff campaign in at least seven markets, including Austin, the 30-second spot was created by American Dream Initiative, a relatively new organization that advocates for “small, efficient government that is honorable and ethical and not overreaching,” Chairman Dan Backer said Thursday.

“He seemed like a good fit for what we are trying to do,” Backer said of Paxton. “He’s a legislator with, and I’m going to be charitable here, with some challenges when it comes to government ethics.”

Backer declined to reveal the donors who financed the ad, which began airing Tuesday, saying federal election law does not require such disclosure for legislative issue ads that do not support or oppose a candidate.

“We are exercising our constitutional privilege to engage in protected speech,” he said.

In an email to supporters, Paxton blasted the spot as a “last-minute, out-of-state-funded attack ad.” The Wednesday email included a plea for contributions to counter what he portrayed as an attempt by his opponent, Dan Branch, and supporters to erase Paxton’s lead in the polls by “throwing mud at every turn.”

A Paxton spokesman also said the ad appeared to violate state and federal election laws, an accusation that Backer and the Branch campaign denied.

Early voting for Tuesday’s runoff ends Friday.

According to tracking by Paxton’s campaign, the American Dream Initiative spent $532,000 to air the ad in Austin, Abilene, Amarillo, Lubbock, Midland, Tyler and Waco. Backer said the cost estimate was accurate, “give or take a couple thousand.”

The ad does not mention the attorney general’s race or Branch, a state representative from Dallas.

Instead, the spot focuses on the $1,000 fine and reprimand given to Paxton on May 2 by the State Securities Board, which found that Paxton solicited clients for a Texas investment firm, receiving 30 percent of management fees, without registering as an investment adviser representative as required by state law. Paxton, a state senator from McKinney, also did not personally disclose the payments to potential clients, the board determined.

The ad closes with a request to “tell Ken Paxton to support ethics reform legislation to make government honest,” providing a phone number to Paxton’s legislative office in McKinney but offering no specific legislation or issue for viewers to advocate.

Paxton’s office had received no ad-related calls by Thursday afternoon, said Sheacy Thompson, the senator’s communications director.

Backer, a lawyer, runs DB Capitol Strategies, a campaign finance and political law firm in Alexandria, Va. He also represented Shaun McCutcheon, the lead plaintiff in a U.S. Supreme Court case that successfully challenged the constitutionality of aggregate spending limits for campaign donors.

The American Dream Initiative is a separate effort intended to champion “traditionally conservative ideals,” particularly government ethics reform,” he said.

The group’s ad featuring Paxton, Backer said, is not an attempt to sway voters in Tuesday’s runoff election.

“We’re taking an opportunity, when people are paying attention, to push the issue of government ethics reform,” he said. “This is one of our first big efforts. This is one of the things we’re trying out to see how well it resonates.”

But Paxton campaign spokesman Anthony Holm dismissed the ad as “yet another desperate attempt by a failing liberal candidate, Dan Branch.”

Holm said ad-buying patterns indicate that Branch and Backer’s organization colluded to air the spot in violation of federal election laws that ban coordination between outside interest groups and candidates.

In seven Texas cities, Holm said, Branch abruptly slashed advertising purchases just as the American Dream Initiative launched its ad campaign in those cities.

“This very clearly points any objective observer toward direct collusion, which is a crime,” Holm said. “They appear to be breaking the law together.”

Backer denied the accusation. “As an attorney who regularly practices in election law, there was nothing improper in the way we approached this issue,” he said.

Enrique Marquez, Branch’s campaign manager, called the allegations of collusion a “desperate … and sad attempt to distract from his recent admission” to violating Texas securities law.

“Our campaign has had no involvement with this third-party effort,” Marquez said.

Holm also said the American Dream Initiative appeared to violate a state election law requiring organizations to file spending reports with the Texas Ethics Commission. Backer, however, said he conferred with a Texas elections lawyer and was confident that all state laws were followed.

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