Texas AG Ken Paxton avoids securities fraud trial

AUSTIN, Texas - Texas Attorney General Ken Paxton didn't say anything Tuesday morning when he entered this Harris County courtroom. Once inside, Paxton was sworn in as his defense attorney and prosecutors finalized what was described as a pre-trial diversion contract.

"It is not a plea bargain. He didn't plead. There is no admission of guilt," said defense attorney Dan Cogdell.

Paxton was accused of helping a company raise money from investors, and not disclosing he was getting paid to do it. He was indicted in 2015 on securities fraud charges.

"We're glad to have this matter behind us. This case has been pending longer than the Beatles were together, literally," said Cogdell.

Judge Beall was not required to sign off on the agreement and when offered to do so, declined. She did point out the decision made by the lawyers was out of her hands.

"No judge can force a prosecutor to present evidence or call witnesses. And so understanding that, you are waiving your right to a jury trial," said Judge Beall to Brian Wice, the Collin County Criminal District Attorney Pro-Tem.

The details of the agreement include:

• Restitution payment of $271,000
• Taking 15 hours in an ethics class
• 100 hours of community service

All the conditions are to be done within the next year and a half. If completed, all the charges will officially be dismissed. It was noted Ken Paxton is not accused of a violent crime and a big part of the agreement makes him repay the people who invested in the company that he pitched. That stipulation, according to prosecutors, was not included in a deal pitched a few weeks ago.

"It is no small thing that the victims in this case are going to receive, right around $300,000 in restitution from Ken Paxton. That is no small thing. And they are deeply, they didn't think that would happen. They did not. And frankly, six weeks ago when everything had come to surface about potentially pretrial intervention that wasn't on the table. And that was a huge part, of this resolution," said Special Prosecutor Jed Silverman.

The payment goes to former state Rep. Byron Cook and businessman Joel Hochenberg, who died last year. In a statement read by lead prosecutor Brian Wice, a representative for Cook and the Hochenberg estate, said they are grateful to be paid back. Wice also said Paxton cannot use his campaign funds to pay the restitution. Defense attorneys claim the deal was made because prosecutors had no case.

MORE: Texas AG Ken Paxton securities fraud case deal reached with prosecutors

"It was a case on day one. We knew they couldn't prove it. And on. On year nine, we still know they couldn't prove it. Ken's not guilty," said Cogdell.

In response to the claims by the defense, Wice said it was their primary duty to seek justice and not to convict.

"If we go to trial as prosecutors, three things can happen and two of them are bad. The jury hangs or he's acquitted. We are confident that a rational Harris County jury would have found our proof sufficient beyond a reasonable doubt. But you know what? That's why God built the courthouse. Because you never know," said Wice. 

With the agreement signed, Paxton exchanged a smile and a handshake with one of his lawyers. In a social media post, Paxton said he is happy the case is over and restated he is not guilty. Paxton's supporters also weighed in with how they view the court agreement.

Wice addressed the spin that started long before the agreement was signed.

"The facts are these, that ultimately this is a resolution that required him, whether indirectly or indirectly, to accept responsibility. In April 2015, he accepted responsibility before the Texas State Securities Board. And I need to correct my good friend, Mr. Cogdell, he didn't pay a $200 fine. He paid $1,000 fine. And he acknowledged engaging in the underlying third degree felony. I am not going to expressly comment on whether or not he's accepted responsibility for the first degree felony. I think, you know, the public can make up its own mind, but the fact that he was willing, to pay almost $300,000 in restitution, perform as much, if not more, community service than your typical defendant, and to take five times as many hours of legal ethics. Look, you know, I'm not going to concern myself. And I owed this to, you know, who wins our oath that we took? And maybe you weren't listening was. Our primary duty is to do justice and not to convict. So the question isn't whether or not who won, what was justice served? And I think the answer to that is unmistakably, Yes," said Wice.

Missed opportunities by voters were also noted as Wice talked about the angry messages he has been getting since word of a deal was leaked to a media outlet.

"To the fact that all of these people have registered their monumental displeasure at what happened in these cases, I submit, probably should have been directed at the ballot box in, I don't know, 2016, 2020 and 2024," said Wice.

Paxton’s progress in keeping the agreement will not be monitored by the Probation Office but by Wice and Silverman.

"He's got to straighten up and fly right for the next 18 months," said Brian Smith with St. Edward’s University.

Paxton, Smith added, still has several other legal battles to fight.

"Using the baseball analogy, we're talking about a seven-game series. Paxton won his first couple games. He's gotten reelected. He got through the impeachment. He's gotten this most recent deal taken care of with the tech start up. But it isn't enough to win the series. He still has a lot facing him. And that's one of the things about the attorney general is he's been very lucky and very good at getting through these other situations, but it doesn't mean that he's going to get through the federal trial or the whistleblower lawsuit. There's still a lot hanging over the attorney general's head," said Smith.

Judge Beall also made it clear Paxton is not free and clear with her court just yet. If the contract is violated, the judge said she would be setting a very speedy trial.

"Over the last six weeks, I have gotten these cases ready for trial. That's not going to be that's not going to change in the event he steps off the line, doesn't do what needs to be done. We are going to be standing in front of a jury and we're going to try this case. Ultimately, he's getting treated just like any other citizen in this county would be treated. We hope he's successful. We hope he pays the restitution and complies with the terms of this agreement," said Silverman.