Paxton to face pair of trials
Registration case seen as ‘simple,’ to be tried before securities fraud
McKINNEY — The state will try Texas Attorney General Ken Paxton first on a charge that he failed to register as an investment adviser, pushing off a lengthy trial on his more vexing securities fraud charges until a later date, the case’s special prosecutors announced at a court hearing in Collin County on Thursday.
Kent Schaffer, a Houston defense lawyer assigned to the case as a special prosecutor, said a trial on the registration charge can be completed within days and is a “straightforward, simple case,” whereas the fraud case is more complex, requires more evidence and could last weeks.
“To me, it doesn’t really make sense to bring two totally unrelated pieces,” Schaffer told reporters. “There’s nothing in common except the defendant.”
The fraud charges, which
carry a sentence of up to 99 years in prison and thousands of dollars in fines, likely would be tried weeks or months after the registration case is finished, Schaffer said. The move could push the trial into the beginning of the 2018 election cycle in which Paxton intends to ask voters to re-elect him as attorney general.
News of the state’s decision riled Paxton’s defense team, which had been under the impression the two securities fraud charges and the registration charge would be tried together.
“I’m surprised because I was told exactly the other position,” Dan Cogdell, one of Paxton’s defense attorneys, told reporters after the hearing. “I’ve ceased being surprised in this case.”
He said a second special prosecutor, Brian Wice, had told him informally the charges would be tried together.
Cogdell told the court that breaking the case into two trials will increase the price tag to the state’s special prosecutors who were brought on after the Collin County district attorney declined to take up the case, citing his friendship and business relationship with Paxton, 54.
The decision of whether to conduct one trial or two is up to the prosecutors, but Paxton’s team could fight the decision in hopes of forcing Tarrant County state District Judge George Gallagher to weigh in. His office had told reporters this week it expected one trial that would stretch three weeks.
July 2015 indictment
Paxton was indicted in July 2015 on two criminal counts of first-degree felony securities fraud for not telling people in his investment group he would make a profit by convincing them to buy stock in Servergy Inc., a North Texas technology company. He raised $840,000 from investors and received 100,000 shares of stock, valued at $1 each, in return, according to court documents.
He faces a third-degree felony charge of failing to register as an investment adviser with the Texas State Securities Board when he funneled investors to Mowery Capital Management LLC. He paid the securities board a $1,000 fine in 2015 and blamed his failure to register on an administrative error.
Paxton has maintained he is innocent of any wrongdoing and is the victim of a political witch hunt.
He faces similar charges by the U.S. Securities and Exchange Commission in a federal civil court. The federal judge initially tossed the SEC charges against Paxton but has allowed the government to revise its complaint.
Servergy Inc. was named in the original SEC complaint, as were two former company officials, who settled their cases by paying a combined $260,000 in penalties, according to the SEC.
Gallagher is expected to rule later on the prosecutors’ request for a change of venue. He told both sides at the hearing his intention was “to at least try to pick the jury here in Collin County,” where Paxton lives and where the case is filed. The trial had been scheduled to begin May 1.
Prosecutors said they accept the judge’s decision to try to seat a jury before ruling whether to move the case.
In a pretrial hearing at the Collin County Courthouse, prosecutors pressed their case that Paxton’s supporters, which they have nicknamed “Team Paxton,” had orchestrated a “22-month siege” to smear the prosecutors, Paxton’s alleged victims and the court through various media to taint the pool of jurors. To guarantee a fair trial, prosecutors argue the trial should be moved to a different location.
Cogdell countered that none of the people prosecutors brought to testify had personally known Paxton or most members of his legal team, and it is unlikely media siding with Paxton has reached enough residents to jeopardize the integrity of the jury pool.
Paxton backers speak out
Prosecutors drew testimony from three people who work in media, including a TV reporter from the Dallas CBS affiliate who was given an exclusive interview with former Pennsylvania Sen. and GOP presidential primary candidate Rick Santorum about why charges against Paxton should be dropped. Paxton counts Santorum as one of his supporters. KTVT TV reporter J.D. Miles said the interview was pitched and arranged by Jeffory Blackard, a North Texas real estate developer and Paxton political donor who has filed several lawsuits to defund the prosecution. Payment to the special prosecutors has tallied more than $460,000, but Blackard argues pretrial fees should be capped at $1,000.
Other witnesses, including former Houston KTRK investigative reporter-turned consultant Wayne Dolcefino, who leaked a confidential Texas Rangers report to a reporter at Watchdog. org, a right-leaning news website prosecutors say later blitzed popular talk-radio station WBAP airwaves by airing $2,950 in radio ads in one day to criticize prosecutors and champion Paxton.
Dolcefino, who specializes in investigative work and media relations, said he was “not paid a penny” to share the report with the website, and said if he wanted to taint the jury pool, he would have shared the report with every reporter in the Dallas area.
Seated between two of his lawyers, Paxton appeared amused during Dolcefino’s cross examination, often leaning forward with his elbows on his knees.
Paxton, who was joined in court by his wife, Angela, left out a backdoor of the courthouse Thursday without taking questions from reporters.
While Paxton’s legal team declined to present witnesses at the hearing to counter the push for a change in venue, his lawyers said in a court filing Wednesday that special prosecutors have cast their client in a bad light across the state, leaving his chances for an unbiased jury best-suited where it is now.
“Implicit in the State’s position is the assumption that Collin County residents cannot be fair, that they are biased ideologues, hopelessly susceptible to the influence of a few Paxton supporters,” the filing read.