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Appeals court temporarily halts decision to move Texas AG Ken Paxton’s fraud cases to Collin County

The Texas Court of Criminal Appeals will make the final call on whether the criminal cases against Paxton belong in Collin or Harris County.

Updated on Sept. 16, 2021 at 10:30 a.m., and Sept. 9, 2021, July 28, 2021, at 11:10 a.m. and June 9, 2021, at 10:50 a.m. with more information about the prosecutors’ request for a stay and en banc reconsideration.

AUSTIN — A Texas appeals court has put on hold an order to move Ken Paxton’s fraud case from Harris to Collin County, a temporary win for prosecutors pursuing criminal charges against the sitting attorney general.

In a split decision earlier this summer, a three-judge panel of the 1st Court of Appeals in Houston agreed with Paxton that Collin County was the proper venue for the cases against him and that any subsequent trial should be held there. The Houston court later denied prosecutors’ request to reconsider the ruling.

The decision was a big win for Paxton, a Republican who has lived in McKinney for decades and enjoys support in the reliably red county. He has long argued the cases should be tried in Collin County, where they originated.

But on Thursday, the state’s top appeals court halted the decision to move the back cases to North Texas — for now. Prosecutors declined to comment on the stay, which is a temporary win for them. The Court of Criminal Appeals will make the final decision on the proper venue for the cases.

Paxton’s lawyers did not immediately return a request for comment. But they previously called the previous decision to move the cases, which turned 6 years old in July, out of Harris County a win.

“It is time that the prosecutors allow Mr. Paxton to have his day in court,” Philip Hilder said in June.

Elected to statewide office in November 2014, Paxton was indicted months later for securities fraud.

He is accused of duping investors to buy into a North Texas technology startup called Servergy Inc. without disclosing he was being compensated by the CEO. He faces two first-degree felony fraud charges based on these allegations, each of which carry a five- to 99-year sentence and up to $10,000 fine.

Paxton also allegedly funneled clients to a friend’s investing firm without being registered with the state as an investment adviser representative. He was charged with a third-degree felony based on these allegations, which carries a two- to 10-year sentence and up to $10,000 fine. Paxton signed a disciplinary order in April 2014 regarding the failure to register, was fined $1,000 and reprimanded, but has denied criminal wrongdoing and called the issue an administrative error.

While the cases originated in McKinney, where the alleged crimes took place, the prosecutors convinced Judge George Gallagher to move them in 2017 after arguing any jury pool in Collin County would be tainted by pro-Paxton bias.

The cases were then reassigned to a judge in Harris County, who recused himself last year because the office of the attorney general was representing him in another legal matter. A second judge in Houston — at least the fourth judge to preside over the case since 2015 — then took over, but also said the cases should be moved back to Collin County.

All the while, Paxton’s trials were on hold as the two sides continued to fight over the proper venue as well as how much the prosecutors should be paid. Hurricane Harvey and the pandemic also stalled the proceedings.

The Court of Appeals had ruled the cases should move back to Collin County, noting Gallagher had a temporary assignment that expired months earlier. One of the three justices, all Democrats, dissented but nevertheless urged expediency.

“Almost six years has elapsed since Paxton was indicted,” Justice Gordon Goodman wrote in his dissent. “Whichever district court ultimately receives these cases should move them to trial as expeditiously as possible.”

But on July 23, the prosecutors dropped what they called “a veritable smoking gun” proving why the case should remain in Harris County. Paxton’s lawyers knew Gallagher’s assignment had expired when he moved the cases out of Collin County, the prosecutors allege, but purposely failed to raise the issue so it could be fixed.

Specifically, the prosecutors allege the administrative judge who appointed Gallagher told Paxton’s lawyers about the parameters of his assignment in November 2015. Paxton did not object to Gallagher on the grounds that his assignment had expired until 2017, they said, after the judge ruled the case should be moved out of Collin County.

“[Paxton’s] silence was a stratagem designed to sandbag every judge in this matter and garner and unwarranted windfall on venue,” the prosecutors wrote. The judges involved in naming Gallagher to the case, they added, also could have corrected the issue “and avoided unnecessary years of litigation.”

Paxton’s lawyers have not yet replied to this specific allegation. In June, they reiterated their hope the case would restart after years of delays.

Dan Cogdell, one of Paxton’s lawyers, referred specifically to the disagreements over how much the prosecutors should be paid: “Years have been spent by the Special Prosecutors appealing their interim fee payments. I have been around a long time and have never seen a case stalled due to fee issues in criminal cases.”

Since he was indicted, Paxton was reelected and helped his wife Angela secure his old seat in the Texas Senate. He successfully fought federal civil fraud charges arising from these same allegations twice, and beat back separate allegations of malfeasance and bribery.

In the last several months, however, Paxton has come into new legal troubles. He is currently being investigated by the FBI after several top employees accused him of abusing his office to help a friend and campaign donors. These same ex-staffers are also suing Paxton for retaliation, claiming they were fired or forced to resign after raising their concerns.

Last month, Paxton was also roped into a civil securities fraud dispute between his wealth manager and the two men named whose fraud accusations resulted in his indictments.

Paxton is up for reelection next year in 2022.

In This Story

Lauren McGaughy. Lauren is an investigative reporter based in Austin where she focuses on government accountability, criminal justice and LGBTQ issues. Before joining the investigative team, she covered Texas politics for The News and Houston Chronicle, and Louisiana politics for The New Orleans Times-Picayune. She loves cats and comic books and cooks a mean steak.

lmcgaughy@dallasnews.com /laurenrmcgaughy @lmcgaughy https://www.instagram.com/laurenmcgaughy/ LinkedIn Iconhttps://www.linkedin.com/in/lauren-mcgaughy-05b49812/
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