Donor subject of Medicaid fraud probe gives to Paxton campaign for his legal defense

By Karen Kidd | Aug 7, 2016

DALLAS – When Texas' embattled attorney general accepted a $100,000 gift from a businessman allegedly without knowing the donor faced allegations of Medicare and Medicaid fraud, it raised questions similar to those endured by another Southern attorney general this summer.

DALLAS – When Texas' embattled attorney general accepted a $100,000 gift from a businessman allegedly without knowing the donor faced allegations of Medicare and Medicaid fraud, it raised questions similar to those endured by another Southern attorney general this summer.

Whatever the truth, both politicians created at least the appearance of bias and impropriety, a common hazard for legal professionals whose jobs depend on the popular vote.

Florida Attorney General Pam Bondi  

"It is a challenging balance because, on the one hand, they are elected and beholden to those who elected them, with one notable and unique situation," Dorothy Easley of the law firm Easley Appellate Practice in Miami was quoted in a Florida Record about that state's attorney general. "Elected judges are judicial officers, while elected in the county and circuit courts – appointed in the appellate and Florida Supreme Court levels – take an oath to follow the law as their guide and to, in plain, and perhaps oversimplified, terms, remain loyal to the law, not loyal to those who elected them."

Both Texas Attorney General Ken Paxton and Florida Attorney General Pam Bondi, both Republicans, have come under fire this summer for accepting donations from individuals who were being investigated. In Paxton's case, the Texas attorney general received a $100,000 gift from James Webb, president of Preferred Imagine, to help Paxton with costs stemming from his many legal troubles.

The U.S. attorney for the North District of Texas announced last week that the North Texas medical imaging company agreed to a $3.5 million settlement for allegedly providing services to Medicare and Medicaid patients without an attending physician present as required by law. Multiple agencies have since told The Dallas Morning News that Paxton didn't know about the probe and that his office had little involvement.

In Bondi's case, the donor was associated with then-presidential hopeful and now Republican Party nominee Donald Trump, the amount was much smaller and it was a political contribution for her planned re-election campaign. In the fall of 2013, Florida Attorney General Pam Bondi received a $25,000 donation from a Trump family foundation at about the time her office considered joining an investigation into alleged fraud at Trump University, according to an Associated Press report.

The donation was in the form of a check received by the group And Justice For All, which supports Bondi's re-election, on Sept. 17, 2013. After the check arrived, the attorney general's office decided not to join a New York state probe into Trump University's activities, according to the AP report.

Bondi also has endorsed Trump's bid for president.

The possible conflict between that donation and Florida attorney general's office's decision not to join the problem came to light this past June. Bondi later told CNN that her office decided New York's litigation was enough without Florida joining and that Trump's donation had not influenced that decision.

The few weeks of controversy over Bondi's donation acceptance has since died down; but for Paxton, his brow-raising acceptance of the donation from Webb is only the latest negative news to plague his time at Texas attorney general. Paxton is fighting U.S. Securities and Exchange Commission's charges filed in federal court in April that he misled investors in a technology company called Servergy. The SEC alleges Paxton raised hundreds of thousands of dollars for Servergy while never disclosing he would receive a commission.

In May 2014, Paxton, then running for attorney general, was fined $1,000 by the Texas State Securities Board for violating the state's Securities Act when he solicited investment clients without being registered to do so. Paxton failed to disclose to his clients that he would receive 30 percent of asset management fees collected, according to that disciplinary order.

A Collin County grand jury indicted Paxton last summer on two counts of first degree state securities fraud and a single count of third degree felony charges rooted in the same allegations that lead to the TSSB's disciplinary order. Paxton did get some good news out of Collin County when another grand jury there decided in March to take no action against him in separate criminal charges related to a real estate transaction in McKinney.

An unknown scammer also has added to the swirl around Paxton and his office by using them as part of an email scam to fool recipients into downloading harmful software to their computers.

Speaking about the trouble Bondi got into over accepting the Trump donation, Easley said such problems are a political reality for elected legal professional.

"We have a political system built on elections, not appointments," Easley said. "Those running for office need money to fuel those campaigns, obviously. They will continue to receive campaign contributions. And the sheer amount of money being funneled into campaigns today, both from within and outside the United States, is huge."

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Easley Appellate Practice PLLC Florida Office of the Attorney General Texas Office of the Attorney General U.S. Securities and Exchange Commission

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