Texas AG Faces Bribery Probe for Taking $100K Gift

October 5, 2017
By David Lee

DALLAS (CN) – A Dallas-area district attorney confirmed Thursday her office is investigating embattled Texas Attorney General Ken Paxton for accepting a $100,000 gift from the leader of a company that was being investigated for Medicaid fraud.

Kaufman County District Attorney Erleigh Wiley, a fellow Republican, told The Dallas Morning News she is looking into whether Paxton violated state laws that limit gifts public servants can receive from people under their jurisdiction.

She cited “great cooperation” from Paxton’s attorneys and the Texas Rangers, saying she is close to deciding whether to present a case to a grand jury.

“There is an active investigation looking into that matter,” Wiley told the newspaper. “We are carefully and thoroughly going through every piece of evidence.”

Wiley was appointed to the case by a regional administrative judge after it came to light that Paxton accepted the gift from James Webb, head of Preferred Imaging LLC, in 2015.

Federal prosecutors announced in July 2016 that the Dallas-based company would pay $3.5 million to resolve a whistleblower’s False Claims Act and Texas Medicaid Fraud Prevention Act claims that it engaged in improper billing.

Preferred Imaging admitted no wrongdoing in the settlement. The U.S. Department of Justice acknowledged at the time the Texas Attorney General’s Civil Medicaid Fraud Division for helping in the investigation.

The Texas Penal Code forbids public servants from accepting “any benefit from a person the public servant knows to be subject to regulation, inspection of investigation by the public servant or his agency.”

Paxton denied at the time of the settlement any violation of the gift rules of his office, saying there was no investigation of the company because the division “never received a referral.”

Paxton spokesman Matt Welch said Thursday that the attorney general’s office has “fully cooperated” with Wiley’s investigation.

“Attorney General Paxton’s personal finance statement fully complied with Texas ethics laws and has been thoroughly vetted by legal counsel who are ethics experts,” Welch said in a statement. “Despite irresponsible media speculation and wishful thinking by political opponents, all donations given to the Paxton legal defense effort are in full compliance with state law.”

Paxton’s legal costs have mounted as he awaits trial on two first-degree felony counts of securities fraud and a third-degree felony count of failing to register with a state securities regulator dating back to his time in the Texas House of Representatives in 2011. He faces up to 99 years in state prison if convicted.

Preferred Imaging’s settlement came five months after the Texas Ethics Commission narrowly rejected an advisory opinion that would have allowed Paxton to use out-of-state donations to fund his legal defenses. If approved, the opinion would have allowed Paxton’s employees to avoid the gift laws by accepting a “benefit” from a donor with no ties to the state and who is not subject to the commission’s jurisdiction.

From Courthouse News.

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Texas AG Wins Long Fight for New Judge in Securities Fraud Case

June 9, 2017
By David Lee

McKINNEY, Texas (CN) – Texas Attorney General Ken Paxton got his wish Friday when the trial judge in his drawn-out criminal securities fraud case relinquished control to be replaced by another judge in Houston.

State District Judge George Gallagher on Friday vacated several orders he made after he moved the closely followed case from Collin County in suburban Dallas to Harris County on April 11.

The 5th Court of Appeals in Dallas ruled May 30 that Gallagher lost jurisdiction when he changed venue. Paxton relied on a little-used argument that state law requires the defendant to sign off on the judge continuing on the case after the venue change.

The state’s highest criminal court, the Texas Court of Criminal Appeals, rejected prosecutors’ appeal of the ruling on Wednesday, paving the way for Gallagher’s replacement.

Harris County District Courts Administrator Clay Bowman told The Dallas Morning News on Thursday that Administrative Judge Robert Schaffer would be in charge of naming a replacement judge.

Paxton was charged in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. He faces up to 99 years in state prison if convicted.

He is accused of failing to tell investors in McKinney-based tech firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company. The alleged crimes took place while he was a member of the Texas House of Representatives.

Gallagher, a trial judge from Tarrant County, has repeatedly ruled against Paxton during the run-up to trial. He rejected several motions to have the case thrown out in December 2015.

Gallagher further annoyed Paxton’s legal team in February when he granted prosecutors’ request to hold two felony trials, one for each type of charge. Paxton’s attorneys said the ruling was “absurd” and that it would “either double or triple” the cost to Collin County taxpayers.

In granting prosecutors’ request for a change of venue two months later, Gallagher was apparently persuaded that Paxton’s legal team had engaged in a “crusade” to taint the jury pool in his home county.

Paxton has doggedly tried to get Gallagher taken off the case since the venue change, asking to a new judge at least four times. Gallagher rejected Paxton’s first request for a new judge on April 17.

Paxton asked Harris County District Clerk Chris Daniels to randomly assign a Harris County judge two weeks later.

He then asked the head of the First Administrative Judicial Region in Dallas to remove Gallagher. Judge Mary Murphy declined, saying she lacks the power to do so and that the trial and appellate courts have jurisdiction.

From Courthouse News.

AG Paxton May Get New Judge in His Felony Trial

June 8, 2017
By David Lee

AUSTIN (CN) – Texas’ highest criminal appeals court late Wednesday paved the way for removal of the trial judge in Attorney General Ken Paxton’s criminal securities fraud case, rejecting prosecutors’ request to reinstate the judge.

Special prosecutors Brian Wice, Kent Schaffer and Nicole DeBorde asked the Texas Court of Criminal Appeals last week to keep state District Judge George Gallagher on the case. The request came after the intermediate 5th Court of Appeals in Dallas granted Paxton’s petition for writ of mandamus on May 30, concluding that Gallagher lost jurisdiction when he moved the case on April 11 from Collin County in suburban Dallas to Harris County.

The high court denied the prosecution’s request without comment, meaning the 5th Court’s vacating of all of Gallagher’s orders after the transfer order will stand. The 5th Court did not explicitly remove Gallagher from the case, but a state district judge in Harris County is expected to be appointed.

Paxton was charged in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. He faces up to 99 years in state prison if convicted.

He is accused of failing to tell investors in McKinney-based tech firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company. The alleged crimes took place while he was a member of the Texas House of Representatives.

Paxton has tried to get Gallagher removed from the case at least four times since the venue change, arguing that state law requires it.

Gallagher rejected Paxton’s first request for a new trial judge on April 17.

Two weeks later, Paxton asked Harris County District Clerk Chris Daniels to randomly assign a Harris County judge.

He then asked the head of the First Administrative Judicial Region in Dallas to remove Gallagher. Judge Mary Murphy declined, saying she lacks the power to do so and that the trial and appellate courts have jurisdiction.

Gallagher, a trial judge from Tarrant County, has frustrated Paxton’s defense with a string of adverse rulings since his appointment to the case in 2015 when a Collin County judge recused himself. He rejected Paxton’s four applications for habeas corpus and six motions to quash in December 2015.

Gallagher surprised Paxton’s attorneys in February when he granted prosecutors’ request to hold two felony trials, one for each type of charge. Paxton’s attorneys called the second trial “absurd,” and said it would “either double or triple” the cost to Collin County taxpayers.

In granting prosecutors’ request for a change of venue two months later, Gallagher apparently was persuaded by arguments that Paxton’s legal team had engaged in a “crusade” to taint the jury pool in his home county.

From Courthouse News.

Texas Attorney General Paxton May Get New Judge in His Criminal Trial

May 31, 2017
By David Lee

DALLAS (CN) – Texas Attorney General Ken Paxton’s relentless pursuit for a new judge in his criminal securities fraud case may have succeeded Tuesday, when an appeals court found the trial judge lost jurisdiction when he moved the case from suburban Dallas to Houston.

A three-judge panel with the Fifth Court of Appeals in Dallas granted Paxton’s petition for writ of mandamus vacating all orders signed by state District Judge George Gallagher after his April 11 order transferring venue from Collin County to Harris County.

The appeals court did not explicitly remove Gallagher from the case, however, injecting more uncertainty in the 2-year-old case.

Paxton was charged in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. He faces up to 99 years in state prison if convicted.

He is accused of failing to tell investors in McKinney-based tech firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company. The alleged crimes took place while he was a member of the Texas House of Representatives.

Gallagher, a trial judge from Tarrant County, was assigned to the case after a Collin County judge recused himself. Gallagher has ruled against Paxton since, rejecting four applications for habeas corpus and six motions to quash in December 2015.

In granting special prosecutors’ request to change venue in April, Gallagher apparently was persuaded that Paxton’s legal team had launched a “crusade” to taint the Collin County jury pool.

Paxton was originally set to go to trial in Collin County in May on the failure to register charge before being tried separately on the securities fraud charges. His first trial was rescheduled for September in Harris County after the venue change, but the Fifth Court’s order vacates that date.

Paxton has tried to get a new judge at least four times since the venue change. Gallagher rejected Paxton’s first request for a new trial judge on April 17.

Two weeks later, Paxton asked Harris County District Clerk Chris Daniels to randomly assign a Harris County judge. He then asked the head of the First Administrative Judicial Region in Dallas to remove Gallagher. Judge Mary Murphy declined, saying she lacks the power to do so and that the trial and appellate courts have jurisdiction.

From Courthouse News.

AG Paxton Tries Again to Remove Judge in Criminal Case

May 16, 2017
By David Lee

DALLAS (CN) – Texas Attorney General Ken Paxton made his fourth request Monday evening to remove the judge overseeing his criminal securities fraud case, this time with a Dallas appeals court that refused to dismiss the case against him last year.

Paxton, a 54-year-old Republican from McKinney, filed his request for emergency relief with the 5th Court of Appeals in Dallas. He claims state District Judge George Gallagher has no discretion to continue presiding over the case after a venue change from Collin County near Dallas to Harris County in the Houston area because Paxton has not given written consent to continue under the Texas Code of Criminal Procedure. Paxton says Gallagher maintained the case on his docket after changing venue.

“That method is only applicable where the state, defendant’s counsel and the defendant give written consent,” Paxton’s 23-page appeal states. “As the requisite consent is lacking, the general rule applies and respondent cannot preside over the case outside Collin County.”

Paxton was charged in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. He faces up to 99 years in state prison if convicted.

He is accused of failing to tell investors in McKinney-based tech firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company. The alleged crimes took place while he was a member of the Texas House of Representatives.

Paxton was set to go to trial in Collin County this month on the failure to register charge before being tried separately on the securities fraud charges. His first trial is now scheduled to begin in September in Harris County.

Judge Gallagher has irritated Paxton’s team with a series of unfavorable pre-trial rulings. He rejected four applications for habeas corpus and six motions to quash in December 2015.

Subsequent appeals to the 5th Court and the Texas Court of Criminal Appeals in 2016 were unsuccessful. The nine-member 5th Court was not persuaded that the previous trial judge in the case erred when he asked prospective jurors who among them wanted to serve on the grand jury.

Paxton steadfastly opposed Gallagher’s decision last month to move the case out of his home county. Gallagher was apparently persuaded by special prosecutors’ argument that Paxton’s team had launched a “crusade” to taint the local jury pool.

Paxton has tried to have Gallagher removed four times in the past month. His first request was rejected by the judge on April 17.

He asked Harris County District Clerk Chris Daniel to randomly assign a Harris County state judge two weeks later.

Paxton then asked the head of the First Administrative Judicial Region in Dallas last week to remove Gallagher.

Judge Mary Murphy declined, telling Paxton she lacks such power and that the matter is under the jurisdiction of trial and appellate courts.

Gallagher cited convenience for moving the trial to Harris County, noting that special prosecutors Brian Wice, Kent Schaffer and Nicole DeBorde and defense attorney Dan Cogdell are all based in Houston.

Paxton’s attorneys are scheduled to appear before Gallagher in Harris County on Thursday to discuss his removal requests. Paxton is asking the 5th Court to cancel the hearing.

The special prosecutors responded to Paxton’s latest request on Tuesday, telling the court in a letter that Paxton erred by not filing his request with an appeals court in Houston.

From Courthouse News.

Texas AG Paxton Keeps Fighting to Oust Judge in His Criminal Case

May 11, 2017
By David Lee

DALLAS (CN) — A persistent Texas Attorney General Ken Paxton on Wednesday asked for removal of the judge overseeing his criminal securities fraud case – his third such attempt since his trial was moved in April from his home in suburban Dallas to Houston.

Paxton, 54, a Republican from McKinney, filed a motion with Judge Mary Murphy, who presides over the First Administrative Judicial Region in Dallas. Murphy oversees administration rules and advises state judges for a 34-county region in North Texas.

Paxton opposes state District Judge George Gallagher’s “continued participation and rulings” in his case because Gallagher’s appointment to the administrative judicial region ended on Dec. 31, 2016. He wants the case moved back to the 416th District Court in Collin County due to the Gallagher’s “expired assignment,” according to court records.

Gallagher has overseen Paxton’s criminal case since 2015. Originally a Tarrant County judge, Gallagher was assigned to the Collin County case after state District Judge Chris Oldner recused himself due to his previous ties to Paxton.

Paxton was charged in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. If convicted, he faces up to 99 years in state prison.

He is accused of failing to tell investors in McKinney-based technology firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company, and of doing so while he was in the Texas House of Representatives.

Paxton was originally scheduled go to trial in Collin County this month on the failure to register charge before being tried separately on the securities fraud charges. His first trial is now scheduled to begin in September in Harris County.

Gallagher irritated Paxton’s attorneys in February when he granted prosecutors’ request for two separate trials. He then moved the trial in April, apparently persuaded by prosecutors’ arguments that Paxton’s team had launched a “crusade” to taint the Collin County jury pool.

He cited convenience for moving the trial, noting that special prosecutors Brian Wice, Kent Schaffer and Nicole DeBorde and defense attorney Dan Cogdell are all based in Houston.

Gallagher rejected Paxton’s first request in April to recuse himself and assign the case to a Harris County judge.

Paxton then asked Harris County District Clerk Chris Daniel to randomly assign a local judge to the case, as he would for a new criminal case.

Gallagher on Wednesday declined to comment on Paxton’s latest filing.

From Courthouse News.

Judge Stays Put in Texas AG’s Criminal Case

April 18, 2017
By David Lee

McKINNEY, Texas (CN) – A Texas judge rebuked Attorney General Ken Paxton on Monday, refusing to recuse himself from Paxton’s criminal securities fraud case or to rule on Paxton’s request for a new judge, after a series of unfavorable pre-trial rulings.

State District Judge George Gallagher confirmed he will stay on the case, one week after he moved the trial from Collin County in suburban Dallas to Harris County in the Houston metropolitan area.

Gallagher granted prosecutors’ motion for change of venue two weeks ago, seemingly persuaded by arguments that Paxton’s team launched a “crusade” to taint the jury pool in Collin County.

The judge’s spokeswoman, Melody McDonald Lanier, said Gallagher “does not need” to rule on Paxton’s motion requesting a Harris County judge.

Paxton was charged by a Collin County grand jury in 2015 with a third-degree felony count of failing to register with the Texas Securities Board and two first-degree felony counts of securities fraud. If convicted he faces up to 99 years in state prison.

He is accused of failing to tell investors in McKinney-based technology firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company himself, while he was in the Texas House of Representatives.

The judge irritated Paxton’s attorneys in February when he granted prosecutors’ request to hold two separate trials: first to try Paxton on the failure to register charge, then on the securities fraud charges.

Paxton’s first trial was set for May 1 before it was moved. Trial was reset to Sept. 11. It is expected to last for two weeks.

Gallagher cited convenience for moving the trial to Harris County, noting that special prosecutors Brian Wice, Kent Schaffer and Nicole DeBorde and defense attorney Dan Cogdell are all based in Houston.

From Courthouse News.