Texas Political Prosecution
Texas has a history of politicized prosecutions that attempt to destroy careers only to be thrown out of court. Think Tom DeLay and Rick Perry. The latest target is Texas Attorney General Ken Paxton, and on inspection the evidence and legal process against him so far look equally dubious.
Mr. Paxton was elected in 2014 on a wave of tea-party support after spending several years in the state legislature. As a lawmaker, Mr. Paxton ruffled the Republican establishment and challenged House Speaker Joe Straus. Mr. Paxton has also roiled Texas politics as AG, challenging the federal government on environmental and labor regulations and the state government on issues involving political speech.
(We recently criticized his grandstanding threat to sue the Trump Administration to deport adult immigrants who were brought to the U.S. as minors.)
In July 2015 Republicans convinced a state grand jury to indict Mr. Paxton on fraud charges, claiming that in private business he had failed to register as an investment adviser in the state when he referred some people to a tech company and was paid a commission. The indictment named GOP state lawmaker Byron Cook, a rival of Mr. Paxton, as a complainant.
But under the Texas State Securities Act Mr. Paxton was not required to register because he never acted as an adviser to Mr. Cook or the others. The relevant law explicitly exempts attorneys from the requirement if “performance of the services is solely incidental to the practice of the person’s profession.” The investment firm Mr. Paxton worked with was already registered with the SEC, which eliminates the requirement of agents to also register.
The indictment also claimed that Mr. Paxton had an affirmative duty to disclose he was not invested, but there is no such duty under state or federal law. When the Securities and Exchange Commission filed similar charges in federal court, federal judge Amos Mazzant dismissed the case.
In his October 2016 ruling, Judge Mazzant noted there was no evidence Mr. Paxton violated laws or engaged in illegal conduct. “The SEC is attempting to place square pegs in round holes,” he wrote. Judge Mazzant ultimately dismissed the case “with prejudice,” barring the SEC from refiling charges.
The state case has nonetheless marched on with political theatrics, including date swapping and venue shopping by the prosecutors. The investigation into Mr. Paxton’s actions was handled by the Texas Rangers, who don’t routinely handle securities cases.
In documents presented to the grand jury that indicted Mr. Paxton, the prosecutors and Rangers claimed that Mr. Paxton referred investors to an investment adviser on July 18, 2012, rather than June 26, when the referral letter was actually sent. The change allowed the state to avoid the statute of limitations, which would have prevented an indictment on any actions before July 7, 2012. These documents are under seal but we have seen a copy.
The trial was scheduled to begin in May 2017 in Collin County, where Mr. Paxton lives and where the charges were brought. The prosecutors filed a petition with Judge George Gallagher to change venue because they claimed they could not get a fair trial. Judge Gallagher granted the petition, moving the trial halfway across Texas to more liberal Harris County around Houston.
That’s highly unusual. A change of venue is typically sought by defendants who don’t believe they can get a fair trial, but not to prosecutors. When the venue was changed, Mr. Paxton petitioned to have Judge Gallagher removed from the case, and a top state appeals court agreed in June. The latest judge is a newly elected Democrat who has never presided over any case, and who has set a trial date for Dec. 11.
Weaponizing the courts for political gain is a refuge of scoundrels and needs to be policed by the courts. Perhaps some new and shocking evidence will emerge to justify the legal assault on Mr. Paxton, but unless it does this looks like a trumped-up case intended to take down a politician who made himself unpopular with the grandees of the GOP establishment.