Texas AG Ken Paxton's security fraud case could be dismissed for community service, report says

AUSTIN, Texas (KTRK) -- Lawyers in Ken Paxton's felony securities fraud case are in talks about a deal to drop the charges facing the Republican attorney general if he performs community service and pays restitution, according to the Austin American-Statesman.

Paxton would also have to take advanced legal education courses under a "draft agreement" that would allow him to skirt next month's trial, the Statesman reported.

Paxton, who has been under indictment on two first-degree fraud charges and a third-degree charge since 2015, was scheduled for a final pretrial hearing on Tuesday ahead of an April 15 trial in Houston. He is accused of soliciting investors in a McKinney technology company more than a decade ago without disclosing that the firm was paying him to promote its stock. He is also charged with steering clients to a friend's investment advising business without registering with the state securities board.

The case has been delayed by a number of disputes between Paxton's attorneys and the special prosecutors handling the case, including over how much the prosecutors should be paid. The sides have also sparred over where the trial should take place.

"I don't know anything about it," special prosecutor Brian Wice told ABC13. Paxton's attorney, Dan Cogdell, said that he "can't comment on something that hasn't happened and may well not happen."

SEE ALSO: Texas AG Ken Paxton's securities fraud case continues despite efforts to throw it out

Paxton likely would not have to enter a plea under the draft agreement, the Statesman reported.

"Some people are going to say that he got off easy, and other people are going to say that they can't believe they even indicted him," Murray Newman, a defense attorney and former prosecutor who isn't affiliated with the case, said.

Because Paxton wouldn't have to plead guilty, Newman said the agreement isn't a plea deal but rather a pre-trial diversion agreement.

"You're looking at two sides that have something to lose and something to gain. Only they can ultimately be the ones who judge whether or not that's a special deal or not," Newman said.

The securities fraud case is separate from the more recent allegations from former top deputies who claim that Paxton accepted bribes and abused the authority of his office to help a wealthy friend and donor, Austin real estate mogul Nate Paul. Those claims were at the heart of Paxton's impeachment trial last year, in which he was acquitted by the Republican-controlled Texas Senate.

Paxton's agency still faces a whistleblower lawsuit in Travis County stemming from the same corruption-related charges.

Meanwhile, the securities fraud case gained renewed momentum in November when Harris County District Judge Andrea Beall ended a dispute over back pay owed to Wice and a second prosecutor, Kent Schaffer, who has since stopped working on the case.

The Texas Court of Criminal Appeals in January declined to take up the pay issue, and Beall rejected Paxton's attempt to toss the case last month, seeming to clear the way for an April trial.

Attorneys are expected to inform Beall on Tuesday of the agreement to resolve the case, according to the Statesman.

Jasper Scherer of The Texas Tribune contributed to this report.

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