Texas Attorney General Ken Paxton Indicted, Sources Say

Collin County grand jury secretly charged him in securities case on Tuesday

NBC 5 and NBCDFW.com will have full coverage of the indictments as they're unsealed Monday at noon. Paxton is expected to address the media at the time of his surrender at a location and time to be determined.

A grand jury in Colin County has indicted Texas Attorney General Ken Paxton on two charges of first-degree securities fraud and one count of third-degree failure to register, two people close to the case told NBC 5 on Saturday.

The indictments were issued on Tuesday and immediately sealed, the sources said, adding they are set to be unsealed on Monday in Collin County.

A Tarrant County judge has been appointed to hear the case, the sources said.

Anthony Holm, a spokesman for Paxton, could not immediately be reached for comment.

With help from the Texas Rangers, the grand jury and two special prosecutors -- both defense attorneys from Houston -- have been investigating whether Paxton committed a securities crime by acting as a broker without being licensed.

Paxton admitted to the Texas securities board last year that he was not registered when he solicited clients for a friend, investment broker Frederick "Fritz" Mowery, who paid Paxton a fee.

Paxton paid a $1,000 fine to the Texas State Securities Board. He has said he thought that the fine ended the matter.

Paxton's relationship with a McKinney computer company called Servergy, has also come under scrutiny. Servergy, which claims to make an energy-efficient computer server, is under investigation by the U.S. Securities and Exchange Commission for possible fraud, according to court records.

Servergy and its founder, Bill Mapp, have not returned calls seeking comment.

The New York Times reported Saturday that Paxton is accused of encouraging people to invest more than $600,000 in Servergy without disclosing that he was paid a commission. Paxton faces two charges of first-degree securities fraud and one count of third-degree failure to register, the newspaper reported.

The Times attributed the information to special prosecutor Kent Schaffer.

Late Saturday, Schaffer and his co-special prosecutor in the case, Brian Wice, issued a statement that only hinted at the indictment. The defense attorneys said they had dedicated their careers to ensuring anyone accused of a crime was guaranteed a presumption of innocence and a fair trial.

"Because our statutory mandate as special prosecutors is not to convict, but to see that justice is done, our commitment to these bedrock principles remains inviolate," they said.

Rep. Matt Krause, a Republican from Fort Worth and a longtime Paxton supporter, issued a statement standing by the attorney general.

"Unfortunately, Texans have seen indictments used as political weapons," he said. "As recently as last week, an indictment was thrown out against former Governor Rick Perry. It's easy to envision the same thing happening here. And that is why I think you will continue to see Texans support General Paxton just as they did last November with his overwhelming victory."

Democrats called on Paxton to step down.

"Ken Paxton is going to be spending the next many months trying desperately to stay out of jail," said Matt Angle, founder of the Lone Star Project, a Democratic political action committee. "Paxton has been indicted for swindling other Texans out of their hard-earned money. He's forfeited any benefit of doubt."

Rep. Chris Turner, a Democrat who serves Arlington and Grand Prairie, also was critical.

"Three felony charges, resulting from a Texas Rangers investigation, are an extremely serious matter," he said in a statement. "As the top law enforcement official in Texas, AG Paxton owes the public a full, candid explanation for these charges, as well as an explanation of how he can continue to do his job as he deals with three felony indictments."

The cloud of a criminal investigation has shadowed Paxton while he emerged as a national Republican figure during his first six months as Texas' attorney general.

"It is time for Paxton to face the consequences. This is yet another example of the corrupt culture that fester with one-party, unchecked Republican power," Texas Democratic Party Executive Director Manny Garcia said.

A tea party star in Texas, Paxton recently advised county clerks they could refuse to issue marriage licenses to same-sex couples on religious grounds after the U.S. Supreme Court legalized the unions nationwide.

NBC 5's Julie Fine and The Associated Press contributed to this report.

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