Hey, remember that time Texans elected a man who had admitted to committing several third-degree felonies to be our attorney general? Turns out the extent of Ken Paxton’s shady, possibly illegal, business deals may be a lot more extensive than we thought.
A story in The Dallas Morning News last week revealed new details about the sketchy business deals that have plagued Paxton since last year. Paxton previously acknowledged that he had operated as an unregistered investment advisor for the McKinney-based Mowery Capital Management firm–actions that constitute third-degree felony violations of state securities law. He paid a $1000 fine to the Texas State Securities Board last year, calling the failure to disclose an “administrative oversight” (though, as a state rep., he voted for the law he later violated). The Texas Rangers are continuing to investigate Paxton, and special prosecutors have been appointed to handle the case in Collin County.
Now, the DMN report reveals that not only did Paxton fail to register as an investment advisor, he failed to inform his private legal clients that he was personally profiting for referring them to a financial advisor. What’s more, the financial advisor he referred them to, Frederick “Fritz” Mowery, is now accused of “unethical and fraudulent conduct” by the state. Mowery had declared bankruptcy in 2005, and is now in danger of losing his own state license.
In March, Mowery faced a hearing with the Texas State Securities Board, who alleged that he engaged in “misrepresentations, conflicts of interest and breach of fiduciary duties.”
The Dallas Morning News examined transcripts of Mowery’s court hearings, and outlined the following new information about Ken Paxton’s involvement with Mowery:
- “Paxton referred at least six of his law clients — twice as many as previously reported — to Mowery for financial advice.”
- “After being questioned by state securities officials, Mowery sent letters in April 2014 to clients referred by Paxton. The letters, which clients were asked to sign, disclosed the fee arrangement with Paxton. But the letters were back-dated to years earlier, when the clients first hired Mowery. The securities board was sharply critical of the practice.”
- “Mowery’s fees were a percentage of how much a client invested. Calculations based on those disclosures show that Paxton received payments amounting from hundreds to thousands of dollars annually.”
Ken Paxton claims he was unaware of Mowery’s checkered financial past when he referred clients to Mowery. He has declined to disclose exactly how much money he gained in profit from his dealings with Mowery.
We’re still learning the full extent of Ken Paxton’s dealings with Mowery; it seems like each time new details emerge, Ken Paxton comes off looking worse. As the attorney general of the state of Texas, Paxton’s responsibility is to enforce the law–instead, we are learning that he had no problem disregarding the law for his own personal gain. If Republican corruption were not so entrenched in Texas, perhaps Paxton’s admitted felonies might put his ability to remain attorney general in more serious doubt. But until there is better oversight, this law-breaking hypocrite will very likely keep on serving as Texas’ chief law-enforcer, and continue to make a mockery of the legal system in the state of Texas.