DALLAS -- Two prominent Houston defense attorneys appointed as special prosecutors will investigate Texas Attorney General Ken Paxton's admitted securities law violations to determine whether the state's top lawyer should face criminal charges.
Kent Schaffer and Brian Wice, neither of whom has ever worked as a prosecutor, were appointed April 22 by Collin County State District Court Judge Scott Becker to replace the county's district attorney Greg Willis as special prosecutors.
After questions were raised about conflicts of interest, Willis recused himself because of his close personal and business relationship with Paxton. Willis and Paxton have been friends since their college days at Baylor University.
The case went to Collin County, a northern Dallas suburb, after the Public Integrity Unit of the Travis County District Attorney's Office declined to investigate. The PIU's funding was cut off by former Gov. Rick Perry, who was later charged with a felony for trying to coerce Travis County District Attorney Rosemary Lehmberg into resigning. Perry's indictment came under a special prosecutor appointed by a judge, a process very similar to that facing Paxton.
Willis earlier in April asked the
"Collin County appears to be the venue where this evidence needs to be heard," according to a letter from a grand jury member that became public. "Therefore, we are requesting the documents be sent to us as soon as possible."
Paxton has issued no official comment but downplayed the case as a minor regulatory issue when he was running for office.
A close political associate of Paxton's told The Bond Buyer that the matter had already been scrutinized by the Securities Board and three district attorneys offices with no criminal action recommended.
"While there have been civil penalties, they have all said there's no fraud," the associate said. "They have no actionable intelligence or file that would warrant pursuing any criminal action."
Both the Perry and the Paxton cases were brought to the courts by the advocacy group Texans for Public Justice after the PIU passed on the cases. The state Legislature is considering legislation that would shift the PIU's duties to Paxton's office or to the county in which an accused official resides.
Texans for Public Justice on April 6 sent the Collin County District Attorney's office a complaint that alleged that while in Collin County, Paxton violated the Texas Securities Act by acting as an investment advisor without being registered with the Texas State Securities Board. The complaint said the allegations were based on a securities board disciplinary order against Paxton.
The securities board's May 2, 2014, disciplinary order said that Paxton occasionally solicited clients for Mowery Capital Management in exchange for 30% of MCM's asset management fees.
In 2004, 2005 and 2012, Paxton solicited three clients to MCM, but he wasn't registered as an investment advisor representative as required under the securities act, according to the order. The board found that Paxton violated Section 12B of the securities act. Paxton paid a $1,000 administrative fine and agreed to disclose certain information to future clients that he solicits.
As attorney general, Paxton must approve all bond issues in the state.
"He'll be given all the rights and safeguards that anybody that's under investigation should have," Schaffer said after he was named special prosecutor.
"And if he should be cleared, he's going to be cleared. And if he should be prosecuted, he's going to be prosecuted, irrespective of his office," Schaffer said.
"While neither of us have ever been full-time prosecutors, Judge Becker believed that with our combined experience of almost seven decades as criminal defense lawyers at both the trial and appellate levels, we were uniquely qualified to handle an investigation of this magnitude," Wice said in a prepared statement.
"Both of us have been special prosecutors on high-profile matters, and are keenly aware of our oaths 'not to convict, but to see that justice is done,'" he added. "Our investigation, one whose scope and duration we cannot predict, will be full and fair and will take us wherever the facts lead us without regard to partisan politics."
In 2013, Wice won a Criminal Court of Appeals reversal of former U.S. House Majority Leader's Tom Delay's conviction on conspiracy and money laundering charges. That conviction in 2010 was a result of prosecution by the PIU, then under the command of longtime Travis County District Attorney Ronnie Earle.
Wice is a commentator for Houston TV station KPRC and has also appeared on network and cable news programs.
Schaffer, a former associate of legendary Texas attorney Richard "Racehorse" Haynes, has also appeared on national news programs. He has represented numerous celebrities and sports figures as well as prominent corporations.
As the Paxton investigation proceeds, the
Under Senate Bill 10 by Sen. Joan Huffman, R-Houston, the duties of the Public Integrity Unit, which remains unfunded, would shift to the state Attorney General's office, the Texas Rangers and to local jurisdictions throughout the state.
The Attorney General would assume "the critical prosecutorial support functions of the PIU and will conduct an initial investigation into any offense named in the act and brought to their attention by a complaint," according to a press release from sponsors of the legislation.
SB 10 would require a Texas Ranger to assist the Attorney General in the initial investigation and verify any findings. If rising to the level of reasonable suspicion, those investigative findings are then forwarded to the administrative judge presiding over the region containing the public official's residence, the sponsors say.
"The goal of this legislation is to remove the investigation and prosecution of persons accused of crimes against public administration from the purview of one locally elected county official," Huffman said in a prepared statement. "These changes will inspire confidence in these critical functions of government and keep this process fair to all Texans, no matter where they live or to which political party they belong."
The bill has already passed the House, where Rep. Poncho Nevarez, D-Eagle Pass, was among those opposing it. Nevarez believes the bill was written specifically to benefit Paxton.
"It doesn't make any sense," Nevarez said. "The whole point of putting the Public Integrity Unit in Austin was to remove the stench of local politics from these prosecutions."
