This is totally unfair, but I’m doing it anyway. I am comparing myself with Texas Attorney General Ken Paxton, who was criminally indicted for securities fraud five years ago but has yet to stand trial. And don’t say it, please. I am no Ken Paxton. I know that. I think that may be the point.
So let’s say I was indicted five years ago for the same thing. Paxton’s indictment says he sold 100,000 shares in a tech company called Servergy, Inc. to a guy, whom we will refer to hereafter as “the mark.”
When he did that, the indictment says Paxton failed to disclose to the mark that the company had agreed to give Paxton 100,000 shares of his own as payment if he could talk the mark into paying cash-American for 100,000 shares. I would try to do the math on what that meant about the value of the shares, but I’m not all that financial.
The indictment also says Paxton failed to inform the mark that he, Paxton, was not putting any of his own cash-American into Servergy, Inc.
So let’s say I did all that same stuff to my neighbor, because, frankly, my neighbor is kind of a mark, too, and I think I could pull it off.
And before we go any further, allow me to say something about black hats and white hats in the Paxton matter. The mark, or person alleged to have been injured by Paxton’s duplicity, was then State Rep. Byron Cook, a rancher who is no longer in elective office. Shortly after doing business with Paxton, Cook was accused in lawsuits of using sketchy Oklahoma mineral rights deals to defraud Charles A. Loper III, a businessman, and Mike Buster, executive pastor of Prestonwood Baptist Church in Plano. So, we’re talking more about gray hats than white or black ones. Maybe there are no hats.
All right, let’s go back to me. Let’s say I pulled the wool over my neighbor’s eyes a little bit, but let’s say he’s not exactly Mother Teresa meets Anthony Fauci, so we won’t go feeling all sorry for him.
Shortly after Paxton was indicted, the federal Securities and Exchange Commission brought civil fraud charges against Paxton and Servergy, Inc., which I keep mistakenly typing as Swervergy. Eventually a federal judge tossed all that out.
The judge said:
“This case is not about whether Paxton had a moral obligation to disclose his financial arrangement with Servergy to potential investors. This case is also not about whether Paxton had some general obligation to disclose his financial arrangement to his investor group. The only issue before the Court is to determine whether the facts as pleaded give rise to a plausible claim under federal securities laws.”
And the answer, the judge said, was no. Which is good to know in my own case. No moral obligations. At least under federal rules. But apparently some kind of pesky outdated moral obligations still linger in Texas law, so Paxton and I are still behind the eight-ball on our state indictments.
Paxton’s main strategy for fighting his state indictment has been a Dickensian campaign of delay (more on Dickens in a moment), based in part on the fact that the judge and prosecutors in the case are all court-appointed. The Collin County D.A. and county judges all had to bow out for conflict. Paxton was a state senator from Collin County from 2013 to 2015, after spending a decade as a state representative. He is a member of literally every municipal booster organization in the county. He’s Mr. Collin County.
So this is how he used all of that to delay the case against him. First Paxton said the Collin County grand jury that indicted him was a crap grand jury. Then a friend of Paxton’s sued the county claiming the court-appointed prosecutors were crap prosecutors who were being grossly overpaid, which was harming the taxpayers of Collin County.
All of that delayed the case for years, not months. Then Paxton said the case had been delayed so long that the court appointment of the judge had run out (ha-ha), so now he was a crap judge.
I’m not making this up. One of the first long dragged-out battles in the case was an unsuccessful bid by Paxton’s lawyers to get their hands on audio recordings of all the grand jury proceedings — pretty wildly unheard of — which they said they needed to prove that the grand jurors were known anti-Paxtonites. That took months and months.
The big play was the one about the prosecutors being overpaid. Paxton’s friend sued to stop Collin County from paying them on the grounds that the lawyers acting as special prosecutors were billing at a higher hourly rate than county rules allowed.
Maybe they were. It’s a gray area about who had authority to set the pay rate, the county or the court-appointed judge. And why wouldn’t you settle all that after the criminal trial?
But the Collin County Commissioners Court was all too delighted to have an excuse not to pay them and screw up the trial. The prosecutors still haven’t been paid. Now the matter is in limbo in the courts, and the unpaid bill is in the hundreds of thousands of dollars.
Then Paxton went after the judge and said his appointment had lapsed, which could be true. It’s hard to tell. Another judge said it didn’t make any difference. But that dragged it out some more.
Let’s go back to me. I have been indicted. I get the court to give me all court-appointed judges and prosecutors, too, because I am able to argue that everybody in Dallas County hates me.
I tell the court-appointed judge that the grand jury that indicted me is a crap anti-Schutze grand jury and I want tapes of all their proceedings. My question here today: how long do we think it takes the court to rule on that? I know it’s somewhere between five and 10 minutes.
So I get my other neighbor, also a bit of a mark, to sue the county for paying the court-appointed prosecutors too much in my case. That is, I get him to try to sue the county for paying my prosecutors too much.
Next, I tell the court-appointed judge that he’s a crap judge, because (ha-ha-ha) his court appointment has run out because he let me delay his trial for so long. So am I in a cell yet? Am I actually chained to the wall? Are the other prisoners mocking me? I think so. I think they may be jeering and throwing things at me.
We haven’t even touched on the change of venue question. The prosecutors got the case moved out of Collin County. Need we say why? It was sent to Harris County, to a court in Houston.
But a week ago, a judge agreed with Paxton’s lawyers that the case should be moved back to Collin County, because the court-appointed judge who sent it to Harris County had allowed the case to drag on so long that his court appointment had run out (ha-ha-ha), so he shouldn’t have still been the judge when he was still the judge.
The prosecutors are saying they are confidant they can get a new judge appointed or maybe get the same one re-appointed and get the trial sent back to Harris County again, if somebody pays them. But they won’t try to do it unless they get paid. And nobody will pay them. So all of this takes, what, another year? Couple years? Three years?
So, Dickens. State of Texas v. Warren Kenneth Paxton, Jr. has become to Texas law what Jarndyce and Jarndyce was to Charles Dickens’ novel Bleak House, published as a magazine serial from 1852 to 1853:
“Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises.”
And me? I’m no Ken Paxton. I just need to stay the hell away from securities sales. And my neighbors.