Paxton’s Plea Deal Came After Holes Emerged in Prosecution

In the lead-up to a trial that never happened, prosecutors overseeing felony securities charges against Texas Attorney General Ken Paxton (R) discovered one hole and then another that prompted them to abandon the case that could have put Paxton in prison for decades.

A little more than two months before the nine-year-old case was set to go to trial, prosecutors re-examined their case on what they thought was an easy conviction alleging Paxton failed to register as an investment adviser. They noticed for the first time that their most important witness had said he’d take the fall for Paxton if called to testify, and assume responsibility for failing to register Paxton.

“He was not going to be helpful at all,” prosecutor Brian Wice said of the witness.

The loss of that witness followed the death of another key witness a year earlier.

Prosecutors had failed to record his testimony—thought to be the most persuasive of the case—by deposition, leaving them unable to salvage a more serious charge of first-degree fraud.

With their case so weakened, the prosecution decided to try to settle.

Last week, Paxton, 61, agreed to pay $271,000 restitution plus complete 100 hours of community service and 15 hours of legal ethics training to avoid his criminal trial. He must complete all conditions in 18 months.

No Witness, No Deposition

Special prosecutors—decorated Houston defense lawyers Wice and Kent Schaffer—now regret not asking a judge for permission to prematurely take Joel Hochberg’s deposition in the event something were to happen to him before trial.

“That’s on us,” Wice said last week. “That didn’t happen.”

Hochberg, a Miami video game executive, died “peacefully” in April 2023, according to his obituary. He was 87.

Wice, an appellate specialist assigned with filing briefs in the case, blames Schaffer.

Schaffer, whose client list includes rapper Travis Scott and actors Farrah Fawcett and Armie Hammer, was tasked with interviewing Paxton witnesses.

As the slow-moving case grew old, delayed by fights over where the trial should be held and how much prosecutors should be paid, Wice said he urged Schaffer to pursue Hochberg’s deposition.

“You’ll have to ask him why he didn’t want to act on my suggestions,” Wice said.

Schaffer, who left the case in February over a disagreement with Wice about a previous settlement offer, said he had no reason to believe Hochberg wouldn’t make it to trial.

“I knew he was old, but up until his death he was of sound mind,” Schaffer said.

The misplaced confidence in Hochberg’s availability wrecked one, possibly both, first-degree felony fraud charges.

Hochberg was expected to tell a jury about the time Paxton urged him to invest more than $100,000 into the technology company Servergy without disclosing he stood to collect a commission.

His estate will receive part of Paxton’s restitution. The other part will go to another victim, former state Rep. Byron Cook, Paxton’s one-time mentor in the Texas House.

“Hochberg was a great witness,” Schaffer said. “He was the best witness.”

Unlike other investors who knew Paxton well and were expected to testify favorably for him, Hochberg had no motive to soften his words for Paxton’s benefit.

Jed Silverman, a Houston defense lawyer who joined the prosecution team after Schaffer’s exit, said Hochberg’s testimony could’ve sealed the case against Paxton.

“There are two kinds of witnesses who garner a world of sympathy from jurors: small children and old people,” he said. “Juries tend to believe them. The reality is Mr. Hochberg was around 80 (when the case was indicted in 2015). In my opinion, there should have been a motion made to have him deposed.”

Paxton’s lead attorney, Dan Cogdell, reduced the impact of Hochberg’s death to “an irrelevant data point.”

“We would have won those cases alive or dead,” he said.

Paxton accepted the deal in lieu of a trial, Cogdell said, to avoid the whims of a jury and because the restitution required is less than he would’ve spent in legal fees to try the case.

“This was a shitty case from day one,” Cogdell said. “None of these charges were good charges... They should have discovered that before they indicted him.”

Shifted Responsibility

Barreling toward a fast-approaching trial on April 15, Wice and Silverman prioritized the lowest charge, the third-degree felony accusing Paxton of failing to register as an investment adviser with the state.

It seemed like a slam dunk. Paxton had previously paid a $1,000 fine to resolve the same claims in an administrative hearing, an acknowledgment of wrongdoing prosecutors were eager to present to a jury.

A conviction on any felony charge would’ve stripped Paxton of his law license. However, he would’ve kept his job because Texas doesn’t require its attorney general to be a licensed lawyer.

But a fresh look at the evidence in March turned up a problem.

Fritz Mowery, Paxton’s former investment firm boss, had testified before the state’s securities board in 2014 that it was his responsibility to register Paxton as an adviser. Notes from his testimony had long been available to the prosecution, as had an interview he gave to Texas Rangers investigators. However, only Schaffer was aware of the issue. Wice, tasked with preparing written briefs, didn’t examine the evidence until Schaffer left the case.

At trial, Mowery told the prosecution, he would testify that he had advised Paxton that the Servergy investment was a loser and he should run from it. However, as Paxton’s supervisor, he intended to accept responsibility for the failure to register.

As such, a conviction “went from a QB sneak on the one to a Hail Mary,” Wice said. At that point, Wice backed off his insistence for a trial and engaged Paxton’s lawyers on a resolution.

Schaffer said he had long been aware about the problems with Mowery’s testimony but that he still thought the non-registration charge was winnable.

“If my bar dues aren’t paid, I can’t blame it on my secretary for failing to send a check,” Schaffer said.

Schaffer was prepared to present the jury with two pieces of evidence showing Paxton knew it was his duty to register: His score of 92% on a securities exam, and his vote as a state representative in favor of enhancing the non-registration penalty to a felony from a misdemeanor.

Schaffer left the case in February when Wice blew up a pretrial intervention agreement that he unilaterally negotiated with Paxton’s team. That agreement resembled the one Paxton ultimately accepted, but included 50 fewer community service hours. Restitution wasn’t part of the deal, but Schaffer says he was still pushing for it.

“Cogdell and I hadn’t agreed on a number,” he said.

Silverman, a veteran Houston defense lawyer, agrees that the duty to register was Paxton’s alone. But in order to secure a conviction, he reasoned, it might take a jury of process-minded “engineers” analyzing the charge as “two plus two equals four.” Otherwise, they might conclude the mistake, even if it was Paxton’s, didn’t justify a felony conviction.

At a press conference after the hearing, Wice fell on the sword for not knowing earlier about the defects in the registration charge.

“I’m not in the Navy, but it happened on my watch,” he said. “So regardless of whatever division of responsibility existed at that time, I own that.”

The case is Texas v. Paxton, Tex. Dist. Ct., No. 155510001010- 3, 3/26/24