Securities Fraud Charges Against Texas AG Ken Paxton to Be Dropped

Texas Attorney General Ken Paxton (R) is no stranger to controversy. In 2023, he fought — and successfully fended off — an impeachment attempt by fellow Republicans in the Texas legislature. 


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But Paxton also has been battling criminal charges for almost a decade. In 2015, he was indicted on felony securities fraud charges: 

But a grand jury in Paxton’s hometown of McKinney have now handed up charges that accuse the former state lawmaker of lying to wealthy investors, telling them he put his own money into a tech startup called Servergy Inc. All the while, prosecutors say, Paxton was being compensated by the company.

Servergy CEO Lance Smith said Tuesday that his predecessor paid Paxton as an adviser with stock, giving him 100,000 shares valued at $1 apiece. Smith said that from what he has gathered, Paxton’s job was to help recruit investors.

“That was part of his advising role, making introductions,” said Smith. He added that Paxton remains a shareholder but hasn’t been active with Servergy since 2011.

The case was set to go to trial in April. Tuesday, however, Paxton and special prosecutors reached an agreement in the case that will result in the charges being dropped in exchange for  Paxton paying restitution. 

HOUSTON (AP) — Texas Attorney General Ken Paxton on Tuesday agreed to pay nearly $300,000 in restitution under a deal to end criminal securities fraud charges that have shadowed the Republican for nearly a decade.

The announcement by special prosecutors in a Houston courtroom came less than three weeks before Paxton was set to stand trial on felony charges that could have led to a prison sentence. It was the closest Paxton — who was indicted in 2015 — has ever come to trial over accusations that he duped investors in a tech startup near Dallas.

Under the 18-month agreement, the special prosecutors would drop three felony counts against Paxton as long as he pays full restitution to his victims, and completes 100 hours of community service and 15 hours of legal ethics education. A former special prosecutor said the chance of a conviction was going to be “50-50.”

Once the agreement was reached, Paxton issued a statement on the matter.

For over a decade, my family and I have been dealing with the ongoing stress of these accusations and are relieved to finally have a resolution in this matter. The prosecution came to us to begin negotiations and we were able to come to an agreement on terms. There will never be a conviction in this case nor am I guilty. 

I look forward to putting this behind me. I want to thank my family, team, and supporters for sticking by my side. Dealing with a 10-year case looming over our heads was no easy task. I am glad to move on and will provide further comment in the weeks ahead.

Following the announcement, Texas Lieutenant Governor Dan Patrick shared his happiness with the news, noting that, “The prosecution was wise to save themselves the embarrassment of a courtroom defeat.”

Despite the indictment, Paxton was reelected as Attorney General in 2018 and 2022. He will next be up for reelection in 2026. 

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