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Texas Attorney General Ken Paxton Under Probe For Legal Defense Gift

Marjorie Kamys Cotera
Texas Attorney General Ken Paxton during a news conference on Jan. 12, 2017.

A district attorney has been probing whether Texas Attorney General Ken Paxton broke any laws by accepting a $100,000 gift from a CEO whose company was being investigated for alleged fraud, according to news reports.

Kaufman County District Attorney Erleigh Wiley on Thursday told the Dallas Morning News she was examining whether Paxton ran afoul of state bribery and corrupt practices laws by accepting the gift from James Webb, whose North Texas medical diagnostic company ultimately paid $3.5 million to settle allegations that it improperly billed the government for Medicare and Medicaid services performed without appropriate medical supervision.

"There is an active investigation looking into that matter," the newspaper quoted Wiley, a Republican, as saying. "We are carefully and thoroughly going through every piece of evidence."

Wiley’s office did not immediately respond to messages from the Texas Tribune.

Paxton has been fighting securities fraud charges since July of 2015 — a case that has faced multiple delays due to a dispute over prosecutors' fees. Paxton is accused of misleading investors in a company from before his time as attorney general. If convicted, he could face up to 99 years in prison. He has pleaded not guilty.

Webb gave Paxton a $100,000 gift in 2015 to help the Republican attorney general pay his growing legal bills. Paxton has disclosed accepting at least $547,000 in gifts for his legal defense over the course of his trial for alleged securities fraud.

State bribery laws prohibit elected officials from receiving gifts from people or entities subject to their authority, and as attorney general, Paxton's could extend broadly. Seeking to circumvent those barriers, Paxton's disclosures of legal defense gifts cited an "independent relationship" exception. That allows gifts from family members and those "independent" of an office holder's "official status."

Paxton’s team on Thursday acknowledged the investigation into Webb’s gift and said Paxton did nothing illegal by accepting it and other gifts.

“We have fully cooperated with this inquiry since it began months ago and we have every indication from the Kaufman County DA’s office that it will be completed soon,” Matt Welch, a Paxton spokesman, told the Texas Tribune in a statement. “Attorney General Paxton’s personal financial statement fully complies with Texas ethics laws and has been thoroughly vetted by legal counsel who are ethics experts.”

Webb’s company, Preferred Imaging LLC, admitted no wrongdoing in 2016 when it settled a fraud case with state and federal authorities, including the civil medicaid fraud division within Paxton's office.

Paxton’s office has said the U.S. Attorney General’s Office took the lead in investigating Preferred Imaging and that neither Paxton nor his office was actively involved in it.

The billing investigation covered a six-year period — between January 2009 and February 2015. Paxton took office in January of 2015.

According to the Dallas Morning News, Wiley said Thursday she was close to deciding whether to send the case over Webb’s gift to Paxton to a grand jury. She said she received "great cooperation" from both the Texas Rangers and Paxton's legal team, the newspaper reported.

Welch, the Paxton spokesman, suggested Thursday that questions over the donation’s legality amounted to “irresponsible media speculation and wishful thinking by political opponents.”

On Wednesday, Harris County District Court Judge Robert Johnson delayed the trial on one of three charges Paxton faces for a third time at the request of prosecutors, likely pushing the trial into 2018.

The Texas Tribune provided this story.

Jim Malewitz is an investigative reporter Tribune. He previously covered energy and environmental issues. Before arriving in 2013, he covered those issues for Stateline, a nonprofit news service in Washington, D.C. The Michigan native majored in political science at Grinnell College in Iowa and holds a master’s from the University of Iowa. There, he helped launch the nonprofit Iowa Center for Public Affairs Journalism, where he currently serves on the board of directors. Jim also coaches the Texas Tribune Runoffs, which, sources say, is the scrappiest coed newsroom softball team west of the Mississippi.