{"id":786,"date":"2015-06-01T17:09:37","date_gmt":"2015-06-01T17:09:37","guid":{"rendered":"http:\/\/lawflog.com\/?p=786"},"modified":"2015-06-01T17:10:30","modified_gmt":"2015-06-01T17:10:30","slug":"time-is-running-out-for-ken-paxton-indictment","status":"publish","type":"post","link":"https:\/\/lawflog.com\/?p=786","title":{"rendered":"Time is running out for Ken Paxton indictment"},"content":{"rendered":"

\"Ken<\/a>As best I can determine, the limitations deadline for charging Texas Attorney General Ken Paxton with state securities violations is June 14, 2015. \u00a0If so, that means the grand jury must indict Mr. Paxton at its meeting tomorrow or at its next meeting on Tuesday, June 9, 2015, or\u00a0he cannot be prosecuted for those alleged violations.<\/p>\n

Mr. Paxton is accused of soliciting clients for investment advisor Frederick “Fritz” Mowery<\/a> without disclosing the fact that Mr. Mowery was paying him a 30 percent “commission” for the referrals. \u00a0Mr. Paxton was not registered as a solicitor with the State Securities Board, and thanks to legislation that he supported as a state legislator in 2003 and 2011, someone who solicits investments without being registered commits a third-degree felony.<\/p>\n

According to transcripts of administrative hearings that were conducted during the week of March 9, 2015, Mr.\u00a0Mowery asked his clients to backdate numerous documents, including one that was backdated to June 14, 2012. (I’m probably not supposed to have the transcript, but here it is anyway<\/a>; and here are the state’s closing brief<\/a> and Mowery’s closing brief<\/a>).\u00a0\u00a0According to pages 285 and 287 of that transcript, the document was backdated to make it appear that Mr. Mowery informed Henry Allen and his wife (whose first name is not listed) about the referral fee arrangement with Mr. Paxton.<\/p>\n

In reality, the Allens did not learn about Mr. Paxton’s\u00a0kickback<\/span>\u00a0referral fee until April of 2014, when Mr. Mowery asked them to sign the backdated document. \u00a0I have not seen the document itself because I do not have the hearing exhibits, but two sources have independently told me that June 14, 2012 appears to be the last time Mr. Paxton solicited clients for Mr. Mowery. \u00a0Add three years to that date, and your limitations deadline is June 14, 2015.<\/p>\n

Meanwhile, a source tells me that special prosecutors Brian Wice and Kent Schaffer have promised to present the case to the grand jury before its term expires on June 16, 2015. Even so, I do not understand why the special prosecutors would wait until so near the limitations deadline to present the case. \u00a0Granted, I don’t know what they know, but this case appears to be pretty straightforward. \u00a0Mr. Paxton either solicited clients or he did not, and either he was registered as a securities representative or he was not.<\/p>\n

The Travis County DA’s office had already investigated the case before Mr. Wice, Mr. Schaffer and the Texas Rangers were assigned, and Mr. Paxton had already signed a sworn statement and an agreed order<\/a> with the State Securities Board accepting a $1,000 fine because he solicited clients in 2012 without being registered. \u00a0In other words, it appears that our attorney general\u00a0has already admitted under oath that he committed a felony.<\/p>\n

So how many more details do Mr. Wice and Mr. Schaffer need to gather before they can present the case to the grand jury? I realize they may not be ready to go to trial, but an indictment\u00a0does not require a trial because it is not a conviction. \u00a0The prosecutors only need to convince grand jurors that it is more likely than not that Mr. Paxton committed a crime. \u00a0The trial comes later (if it comes at all).<\/p>\n

SETTING THE RECORD STRAIGHT<\/p>\n

\"GregWillis\"<\/a>In April, Collin County District Attorney Greg Willis was widely criticized for trying to stonewall the criminal investigation of Mr. Paxton, who happens to be his longtime friend and business partner<\/a>. \u00a0In an attempt to rewrite history, Mr. Willis wants to convince us\u00a0that he took appropriate action shortly after receiving\u00a0an April 6, 2015 complaint from Craig McDonald of Texans for Public Justice.<\/p>\n

In particular, Mr. Willis would have us believe that Mr. McDonald’s complaint was the first time he learned of the problem, and he called in the Texas Rangers a mere three days after receiving that complaint from Mr. McDonald. \u00a0In reality, the Travis County DA’s office had referred the case to Mr. Willis on January 29, 2015.<\/p>\n

I got stonewalled in early March when I asked about the status of the Travis County referral, so I wrote to the Collin County grand jury on March 6, 2015 explaining that the grand jury could investigate independently<\/a>\u00a0regardless of what Mr. Willis and his staff wanted, and I sent a copy of that letter to Mr. Willis. I blogged about that letter<\/a> on March 9, 2015, and\u00a0soon thereafter the Houston Chronicle<\/em> and Dallas Morning News<\/em> began asking questions. I sent additional letters\u00a0to Mr. Willis<\/a> and the grand jury<\/a> on March 21, 2015 after I learned that Mr. Willis and Mr. Paxton were business partners, followed by another blog post on March 23, 2015<\/a>. On April 8, 2015, the Collin County grand jury finally went rogue<\/a> and asked the Travis County DA’s office to send the evidence that it had gathered against Mr. Paxton.<\/p>\n

The following day, on April 9, 2015, Mr. Willis announced that he had asked the Texas Rangers to investigate<\/a> Mr. Paxton. In other words, the rogue grand jury is what finally spurred Mr. Willis to initiate an investigation, not a citizen complaint three days earlier. \u00a0But the invitation to the Rangers appeared to be little more than a publicity stunt, because Mr. Willis still had not recused himself from the case against Mr. Paxton, and thus Mr. Willis still maintained ultimate control over the investigation.<\/p>\n

Given all of the political interference in Collin County, I decided to turn my attention to Dallas County, where DA Susan Hawke also appeared to be stonewalling. On April 20, 2015, I sent letters to all four grand juries<\/a> in Dallas County as well as every district judge in Dallas County<\/a>, and I emailed copies widely. \u00a0The following day, Mr. Willis finally announced that he was recusing himself from the Paxton case. Coincidence? I think not.<\/p>\n

Prior to that, Mr. Willis’s staff had repeatedly — and disingenuously — claimed that the DA’s office lacked the capacity to investigate the case against Mr. Paxton. \u00a0The truth? Mr. Willis had 24 investigators with guns and badges<\/a>, including two investigators (and two assistant DAs)<\/a> dedicated to investigating and prosecuting\u00a0“financially motivated criminal activity, organized crime, public integrity matters, and other complex or sensitive cases assigned by the Collin County Criminal District Attorney.\u201d\u00a0In other words, Mr. Willis could have started investigating back in January, when Travis County first referred the case, but instead he did nothing.<\/p>\n

Incidentally, after Mr. Willis announced on April 9, 2015 that he had referred the case to the Texas Rangers, I submitted an open records request for his letter to the Rangers. \u00a0Mr. Willis’s letter was dated April 14, 2015<\/a>, i.e.<\/em>, five days after<\/em> he publicly announced that he had asked the Rangers to investigate. That might not seem significant but for the fact that DPS policy prohibits investigations of public officials unless the local DA agrees in writing to prosecute the case. \u00a0The limitations deadline was looming, and ironically Mr. Willis noted in his letter that time was short, yet he waited until five days after his public announcement to actually send the letter that initiated\u00a0the investigation.<\/p>\n

I have written about other evidence of Mr. Willis’s stonewalling, which you can read about by clicking here<\/a>, but the bottom line is that Mr. Willis had a serious conflict of interest, and he tried to bury\u00a0the case against his friend and business partner, Mr. Paxton. \u00a0I hope voters remember that when Mr. Willis is up for reelection.<\/p>\n

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