Texas AG Ken Paxton could be deposed about securities fraud accusations after election

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Attorney General Ken Paxton will face lawyers for the men who accused him of securities fraud seven years ago in a one-hour deposition after the November elections.

The Dallas Morning News reported Thursday that Collin County District Court Judge Cynthia Wheless ordered Paxton to sit for the deposition on Nov. 28, three weeks after the culmination of Paxton’s reelection race. He is running against Democrat Rochelle Garza.

Paxton did not immediately respond to requests for comment through his government or campaign offices. Phil Hilder, the lawyer representing Paxton in his securities fraud case, declined comment.

Paxton is facing a tough challenge from Garza, with two recent polls showing the two-term incumbent up by only 2 percentage points and 3 percentage points, respectively. Legal challenges have troubled him for years, including during the GOP primary earlier this year, when three opponents highlighted the legal scandals. On top of the securities fraud case, Paxton also faces a whistleblower lawsuit from former top deputies who accused him of abuse of office. An FBI investigation stemmed from those allegations.

The deposition is part of a lawsuit that is separate but related to the seven-year-old securities fraud indictment in which two men, Byron Cook and Joel Hochberg, accuse Paxton of encouraging them to invest in McKinney-based technology company Servergy Inc., without disclosing he would make a commission from those investments. Cook is a former state legislator who served in the Texas House with Paxton.

A year after Paxton was indicted on three felony charges alleging securities law violations, an associate of his, Charles “Chip” Loper III, sued Cook and Hochberg, accusing them of creating a scheme to profit off the investment funds of Unity Resources, a mineral assets company. Loper said the scheme hurt him and his father financially.

Cook and Hochberg’s lawyers said that lawsuit was retaliatory. Last year, they were able to add Paxton as a “responsible third party” to the case by arguing that he was also an investor and the company’s lawyer. As such, they said, Paxton should be held responsible for any alleged wrongdoing.

In a deposition in the Unity case, Cook and Hochberg’s lawyers can ask Paxton about his other securities fraud case.

Paxton has denied wrongdoing in both cases. He faces up to 99 years in prison if convicted in the securities fraud case tied to Servergy.

Cook and Hochberg’s lawyers had tried to depose him twice over the summer in the Unity case, but Paxton’s legal team had said the attorney general had scheduling conflicts. He was deposed in the Unity case once before in August 2019, but records of that deposition remain under seal, according to The Dallas Morning News.

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