AUSTIN – A sealed motion has surfaced in the criminal case against Attorney General Ken Paxton, suggesting prosecutors misled the grand jury to secure an indictment.

In March, Judge George Gallagher, who has been removed from the case, denied a Paxton motion to dismiss and set aside indictment for prosecutorial misconduct before the grand jury.

Paxton
Paxton

The sealed motion, which was posted online by DirectAction Texas on Nov. 20, asserts the following misconduct by prosecutors:

- Misrepresenting the date by which grand jurors should calculate the statute of limitations;

- Asking grand jurors to indict based on the wrong definition of an “investment adviser representative.” A definition that was – and had been – preempted by federal law;

- Omitting to instruct the grand jurors that, as a matter of law, Paxton did not have to register with the State Securities Board because the entity that he worked under, Mowery Capital Management, was itself federally registered;

- Making the false assertion, without evidentiary support, that Paxton knew that certain disclosure documents generated by Mowery Capital were backdated and falsified;

- Misleading the grand jury as to the proper legal standard for pursuing a criminal prosecution versus administrative action; and

- Allowing former district judge Chris Oldner, who recused himself after securing the indictments, to be present in the grand jury room and to make improper statements before the grand jury.  

“The indictment in this case not a product of an honest grand jury presentation,” the motion states. “The grand jury materials provided by the court show that the pro tem lawyers misrepresented the law, turned a blind eye to legal inconveniences, and wove facts from whole cloth.”

The attorney general was reprimanded for failing to register as a representative with Mowery Capital in May 2014.

Paxton solicited three clients for the firm in 2004, 2005 and 2012, and was paid part of the asset management fees. He was fined $1,000 for violating the Texas Securities Act, but was not criminally prosecuted at the time.

However, the left-leaning nonprofit watchdog group Texans for Public Justice filed a criminal complaint against Paxton with prosecutors in Austin, and asked the court to prosecute Paxton for committing a third-degree felony.

After the Texas Rangers investigated the case, Paxton was indicted in August 2015 on three counts: two felony securities fraud charges and one count of third-degree failure to register.

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