Ken Paxton’s legal problems began just as he was entering the height of his political career. Paxton led the pack heading into the 2014 GOP primary for Texas Attorney General, just as his opponents bought airtime to highlight a 2009 lawsuit against the state senator and his longtime business associate.
A Dallas couple claimed they’d been convinced by Paxton to dump hundreds of thousands of dollars into a doomed real estate investment scheme only to find out later, once the venture had tanked, that the lawyer-turned-Tea Party darling had been paid to solicit their money. Soon there were more questions about Paxton’s business dealings. A Texas Tribune investigation ultimately revealed that Paxton had solicited investors for his buddy and longtime business partner Frederick “Fritz” Mowery on and off since at least 2001, yet he’d only registered with the State Securities Board, as required by law, for about two of those years.
Paxton called the Dallas couple’s lawsuit “frivolous,” implying they were simply whiners who blamed him for their own bad investment. But just weeks before he easily won the GOP primary, Paxton admitted to violating state securities laws. Still, he blamed the lapse on an administrative error, and the governor-appointed members of the State Securities Board, in lieu of forwarding the case to prosecutors for possible criminal charges, fined Paxton $1,000. Paxton sailed through the general election and then, just seven months on the job, the felony indictments hit.
But if you ask conservative activist and oilman Tim Dunn, Paxton’s felony indictments ultimately stem from an intra-party squabble over who wields the power in the Texas House — conservative Republicans or super-conservative Republicans. Empower Texans, the arch-conservative political group that Dunn chairs, helped build, support and fund Paxton’s rise to the AG’s office. And now, they’re among the only conservative voices even willing to defend Paxton in public.
In an op-ed published in the Midland Reporter-Telegram this week, Dunn explains how Paxton's criminal charges are an insidious and political plot against the state's sitting attorney general. As with most good conspiracy theories, there’s a kernel truth to what Dunn says — only it’s wrapped in a thick blanket of speculative paranoia.
The conspiracy theory pushed by Empower Texans centers on an investor and Texas state representative named in one of the first-degree felony counts against Paxton: Corsicana Republican Byron Cook. The most serious charges against Paxton allege that he misled Cook and another investor in a North Texas technology company called Servergy Inc. Prosecutors claim Paxton convinced Cook and another businessman to invest hundreds of thousands of dollars in Servergy without disclosing that he himself was being paid by the company to do so.
The Servergy connection is one of the most intriguing elements of the case against Paxton. The U.S. Securities and Exchange Commission, which is currently investigating the company, has accused Servergy of lying to investors by falsely claiming its data servers had already been sold to huge companies like Amazon and Freescale. According to the SEC, Servergy even lied to investors about the very servers it was selling, falsely claiming the machines required 80 percent less cooling, energy and space than others on the market. While Paxton hasn’t been accused of any wrongdoing in the SEC probe, court records show the feds were looking for any Servergy documents bearing his name.
But Empower Texans isn’t interested in Byron Cook because he might have been duped into investing in allegedly crappy data servers by a buddy and fellow lawmaker who didn’t disclose that the company was paying him.
No, Cook’s at the center of Empower Texans’ theory on the Paxton indictments because in the 2009 session, Cook wasn’t as conservative as Empower Texans wanted him to be. An ally of House Speaker Joe Straus, Cook chaired the powerful House Committee on State Affairs and angered hardline conservatives by compromising with Democrats and moderate Republicans to keep antiabortion, anti-immigrant and anti-union legislation from hitting the House floor.
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Feeling burned after the 2009 session yet riding high on the Tea Party wave sweeping the nation, hard-right Republicans, with the urging of groups like Empower Texans, made a run for the speaker’s office in 2011. Paxton, then a state representative, was their man, but he ultimately lost to Straus. Paxton went on to win an open state senate seat in 2012 before Empower Texans helped launch his underdog bid for Attorney General (the group pumped nearly a half million dollars into Paxton’s campaign just during his primary runoff against another Republican candidate.)
That Cook’s name surfaces in the indictment at all is a sign, according to Dunn, of political meddling in the charges against Paxton — not by Democrats, but by moderate Republicans. Empower Texans even says there's indication the investor who surfaced in Paxton's other first-degree felony charge is out to get the AG because of his ties to Paxton's political rivals. Empower Texans says that Joel Hochberg, the other investor that prosecutors say dumped money into Servergy at Paxton's urging, is similarly suspect because he created the 1990s video game “Battletoads,” which was produced by Tradewest, the video game company Cook co-founded. Seriously.
As the Tribune’s Ross Ramsey put it last month, Empower Texans is probably betting on Paxton because, at this point, they’ve really got no other choice. Whether they like it or not, a staunchly conservative, culture war-waging AG is still their most important asset.
But maybe there’s another reason Empower Texans is sticking to the storyline that Paxton's indictments are purely political. It seems that with Paxton’s legal troubles, his greatest supporters see yet another opportunity to drive a wedge between hardline and moderate conservatives in Texas.