© 2015 The Texas Lawbook.
By Mark Curriden
(Aug. 10) – Criminal charges probably should never have been brought against Texas Attorney General Ken Paxton, but now that they have been, he could be at serious risk of going to prison, according to legal experts following the case.
More than a dozen former prosecutors and former judges interviewed by The Texas Lawbook say there is little to no evidence that the charges against Paxton are the result of political motivations and they believe there’s a significant chance that the case will go to trial.
“There will be reams of motions filed to have the charges dismissed, but at the end of the day, this case is going to go to trial and that is not good news for Mr. Paxton,” says former U.S. Attorney Paul Coggins, a partner at Locke Lord in Dallas.
Paxton was indicted last week on three counts of state securities law violations, including his failure to register as an investment adviser and fraudulently selling securities.
“Now that I have read the indictment and read the Texas Securities Act, I can tell you there’s a lot of meat in these charges,” says former Dallas prosecutor Bob Hinton. “I think Mr. Paxton is in serious risk of being found guilty. He needs to be worried.”
Paxton’s lawyers say he will vigorously fight the allegations. The judge has issued a gag order prohibiting prosecutors and defense lawyers from commenting on the case.
Legal experts predict Paxton’s defense will focus pretrial on challenging the methods and procedures used to obtain the indictment and the validity of the charges during the actual trial.
Supporters of Paxton say the investigation and the charges against him are pure politics and should be quickly dismissed.
While legal experts say there are legitimate and potentially successful arguments Paxton can employ for his defense, the allegation that the charges are politically motivated will have no traction in court.
“There is no evidence that special prosecutors [Kent Schaffer and Brian Wice] viewed or treated this as a political matter,” says Jeff Vaden, a former federal prosecutor for Republican and Democratic administrations.
“Kent and Brian took this case to the grand jury because they think the law and the facts support the charges,” says Vaden, who is a partner who specializes in white-collar criminal law at Bracewell & Giuliani.
Collin Co. District Judge Sean Becker appointed Schaffer and Wice, who are Houston criminal defense lawyers, to take over the case in April as special prosecutors.
“Wice represented Tom Delay. So, I think any argument that they are politically biased rings hollow,” says former Dallas District Judge John Creuzot. “These are very thoughtful and careful lawyers.”
However, several lawyers say the special prosecutors should have exerted more discretion by deciding the matter should be handled as a civil violation instead of a criminal case.
“There are hundreds of similar instances where, just like Mr. Paxton, people failed to register, but it is extremely rare that any of those cases ever result in criminal charges,” says former prosecutor Bill Mateja, now a partner at Fish & Richardson in Dallas.
“It appears that the special prosecutors exercised no discretion at all and just threw all the evidence they collected to the grand jury,” he says.
But Mateja says Paxton’s legal team could have argued to prosecutors and the grand jury that the allegations were investigated by the Texas Securities Commission, which decided to resolve the matter with a $1,000 civil fine instead of referring it to the district attorney for possible criminal charges.
But now, Mateja and others say, Paxton’s admission in the state securities case will most certainly be used against him at trial.
“There is a significant chance that he will be convicted if this goes to trial because he did, after all, admit to violating the securities law,” he says. “It should be a slam dunk case.”
Creuzot says count one should be easy for the jury to decide.
“He was registered as the law requires or he wasn’t,” the former judge says.
Counts two and three accusing Paxton of selling securities without informing the investors that he was not an investor but that he was being compensated for selling the securities to them will be a little more complex.
Legal experts say the strengths and weaknesses of the charges depends almost entirely on how strong the state’s witnesses are for the prosecution.
“Was Paxton’s omission material to the investors?” asks Philip Hilder, a Houston lawyer who was a former federal prosecutor. “If the witnesses say they might have made a different decision had they known about Paxton’s omissions, then the law says it was a violation.”
Coggins and others say they would normally argue to the jury that none of the three counts show that Paxton had any intent to do something illegal and that Paxton’s actions were mere technical infringements of the law.
“But that argument would likely backfire on Paxton because he is, after all, the attorney general of this state,” Coggins says. “Its is actually his job to know and enforce the technicalities of the law. For him to claim the technicalities of the law are irrelevant would be unseemly.”
At the end of the day, none of the legal experts believe there will be a plea agreement or that charges will be dismissed before trial.
“The bottom line is, I don’t see this matter being resolved short of a fight to the death in the courtroom,” Hilder says.
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