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Frederick Mowery

Paxton’s day in appellate court

The grand jury was out to get Ken Paxton, apparently.

Best mugshot ever

Best mugshot ever

Lawyers for Attorney General Ken Paxton on Thursday tried to cast doubt on the makeup of the grand jury that indicted him. They’re hoping to overturn a lower court’s decision not to dismiss the securities fraud charges against him.

Much of the discussion at the Dallas-based 5th Court of Appeals centered on the composition of the Collin County grand jury that indicted Paxton on state charges nearly a year ago, setting up a legal drama that led to federal charges earlier this year. Paxton has pleaded not guilty to the state charges, which allege he misled investors in a company in which he had personal dealings before he became the state’s top law enforcement official.

Paxton’s lawyers argued Thursday morning that the the appeals court should reverse last year’s decision by Collin County District Judge George Gallagher not to end the case against Paxton before trial. Paxton lawyer Bill Mateja told the 5th Court of Appeals that the grand jury that indicted Paxton was not sufficiently random, the result of a judge who allegedly gave prospective jurors too much leeway in removing themselves from the process.

“Quite simply, the court did not follow the rules,” Mateja said, later acknowledging that if the grand jury were voided, it would affect every case it heard, not just Paxton’s. “It is better to nip this in the bud now than allow this to fester.”

Special prosecutor Brian Wice countered that there was nothing improper about how the jury was put together, saying Collin County District Judge Chris Older, who oversaw that process, “had inherent discretion” and “acted in good faith.” Even if the jury’s composition was less than random, Wice said, Paxton’s lawyers have so far failed to show how it harmed them.

See here, here, and here for the background. Seems like a lot to ask the court for a ruling that would have the effect of potentially throwing out a bunch of other indictments, but what do I know? There was another question at issue as well.

The other point of contention was whether Paxton was properly registered as an investment adviser when he encouraged some of his own legal clients to seek the services of Frederick “Fritz” Mowery, a friend who operated an investment firm in the same building as Paxton’s law office. Paxton received a commission on these referrals.

Arguing against the third-degree felony charge, Mateja said Paxton was registered with the federal authorities because so was Frederick “Fritz” Mowery, the friend who operated the investment firm that Paxton recommended.

He added the federal investment definition for investment advisor representative “trumps the state’s definition.” He also called the state definition too broad, saying it could require people who distribute leaflets for investment firms or newspapers that advertise for them to register as a representative.

Wice disagreed, saying the state law is clear and that Paxton should have been registered with the the Texas State Securities Board.

Yes, that’s Ken Paxton’s lawyer arguing that federal law trumps state law. Because Ken Paxton has that much respect for the power of the federal government. How anyone managed to keep a straight face during this is a mystery to me.

Anyway. The courtroom proceedings were staid and boring compared to the political spectacle, which involved Paxton making a video whining about how terribly, terribly persecuted he’s being for this itty bitty financial peccadilloes. I mean, what’s a little fraud among friends, and I right? The Lone Star Project takes apart Paxton’s claims. I’m hoping the 5th Circuit judges do the same; both sides say they expect an expedited ruling, but that would still be months from now. Finally, it turns out that there’s yet another former employee of the AG’s office who is collecting salary for doing nothing. It’s a long story, so read it all; there’s a bit at the end about how this particular employee had oversight of a disastrous project to upgrade and outsource the management of child support enforcement systems. Maybe I’m reading too much into things, but that all smells fishy to me in a way that the others did not. Read it and see what you think. The Chron has more.

Ken Paxton is still an ethical morass

He’s just now a statewide ethical morass.

Sen. Ken Paxton

A state judge will determine whether to revoke the securities license of Frederick Mowery, who was linked to the State Securities Board’s May reprimand of Attorney General-elect Ken Paxton, for allegations that included failure to disclose conflicts of interest, plagiarism and lying to investigators.

Mowery was given 20 days to respond to the allegations — announced Tuesday by the securities board — and invited to appear at a Jan. 27 hearing before an administrative law judge in Austin.

Mowery and his McKinney company, Mowery Capital Management, became embroiled in the race for attorney general last May, when Paxton agreed to a securities board reprimand and $1,000 fine for soliciting clients for Mowery’s firm, receiving 30 percent of management fees without registering as an investment adviser representative as required by state law and without disclosing the business relationship to potential clients.

[…]

The order notifying Mowery of the allegations did not mention Paxton by name.

However, the order accused Mowery of falsifying disclosure documents for a solicitor who appears to be Paxton — the circumstances and language used to describe the relationship between the unnamed solicitor and Mowery appear verbatim in the security board’s reprimand of Paxton.

According to the allegations, Mowery backdated notices disclosing the solicitor’s compensation arrangement to make it appear that two clients were properly notified about the arrangement.

I don’t know what effect this might have on any of the pending actions against Paxton, but I figure if Mowery has his license revoked it won’t look too good for our AG-to-be. I also strongly suspect there are more shoes to drop here. Should be an interesting year next year.