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Texas AG's felony fraud trial could come next spring after court refuses appeal

By Karen Kidd | Nov 8, 2016

Texas Attorney General Ken Paxton

DALLAS – Texas' embattled attorney general is headed for a trial date as early as next spring after the state's court of criminal appeals decided to not get involved in his securities fraud case.

The Texas Court of Criminal Appeals was the last chance first-term Republican Attorney General Ken Paxton had to get his felony indictments thrown out.

"Today's ruling marks an end to Mr. Paxton's almost yearlong attempt to avoid being judged by a jury of his peers," special prosecutor Brian Wice said shortly after the Texas Court of Criminal Appeals announced its decision Oct. 12. "We look forward to going to trial and seeking justice on behalf of the people of Texas."

The court's nine judges, eight of whom are Republican, did not issue an explanation for its decision, which is not unusual. Paxton previously failed to get two lower courts to throw out the indictments against him. Paxton's attorneys have announced they plan to ask the court to reconsider because a federal judge dismissed related civil fraud charges against Paxton earlier this month.

"We anticipate filing a motion for rehearing because we have tremendous confidence in our case," Paxton's attorney Philip Hilder said in a prepared statement soon after the Texas Court of Criminal Appeals' decision. "The charges against Ken Paxton are without merit."

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, 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.

Last summer, Paxon raised brows when it came to light he'd accepted a $100,000 gift from a businessman allegedly without knowing the donor faced allegations of Medicare and Medicaid fraud. Paxton received the 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 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. Paxton claimed to have not known about the probe and his office had little involvement.

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Texas Office of the Attorney GeneralU.S. Securities and Exchange Commission