AUSTIN, Texas (TheBlaze/AP) -- A special prosecutor says Texas Attorney General Ken Paxton has been indicted on felony charges accusing the Republican of misleading investors before taking office.
Kent Schaffer, a Houston defense attorney appointed by a judge to the case, told The New York Times on Saturday that Collin County grand jurors indicted Paxton on two counts of first-degree securities fraud and a lesser, third-degree charge of not registering.
The most serious allegations are that he encouraged investment in a tech startup that's now under investigation by the Securities and Exchange Commission.
The charges stem from activity before Paxton took office in January. Paxton was fined last year for not disclosing to Texas securities regulators he was getting commissions for soliciting investors.
More from the New York Times:
The grand jury in the northern Dallas suburb of McKinney handed up a three-count indictment against Mr. Paxton several days ago, officials said. The indictment is to be unsealed on Monday, when Mr. Paxton is expected to turn himself in to the authorities at the Collin County Jail. The charges — two counts of first-degree securities fraud and one count of third-degree failure to register — are tied to Mr. Paxton’s work soliciting clients and investors for two companies while he was a member of the Texas House of Representatives but before he was elected attorney general in November 2014.
In the most serious charges — first-degree securities fraud — Mr. Paxton is accused of misleading investors in a technology company, Servergy Inc., which is based in his hometown, McKinney. He is accused of encouraging the investors in 2011 to put more than $600,000 in Servergy while failing to tell them he was making a commission on their investment and misrepresenting himself as an investor in the company, said Kent A. Schaffer, one of the two special prosecutors handling the case. The group of investors had been Mr. Paxton’s friends and included a colleague in the Texas House, State Representative Byron Cook.
If convicted, Paxton could face significant jail time. According to the Times, a first-degree charge carries with it the possibility of five to 99 years, while a third-degree charge carries two to 10 years.
Paxton aides didn't respond to messages seeking comment from The Associated Press.