Texas Attorney General Ken Paxton took $100,000 from a "family friend" as a gift from the CEO of a company his office helped investigate for Medicaid fraud to defend himself from criminal charges.
Paxton, not surprisingly, says the money he took from Preferred Imaging LLC head James Webb to defend himself against felony securities charges didn't violate any internal agency policy or state law, according to the Associated Press
. Webb agreed last Friday to a $3.51 million settlement
with the Department of Justice over a whistleblower's False Claims Act and Texas Medicaid Fraud Prevention Act lawsuit that alleged the company improperly billed Medicaid between 2009 and 2015 for services performed without proper medical supervision.
According to documents obtained by the AP, Paxton did in fact violate an internal rule that says employees of the agency cannot knowingly accept gifts from people under investigation by the AG's office. While Paxton's office denied involvement in the case against Webb's company, a Justice Department spokeswoman told the AP his office did assist with the case against Webb.
Paxton says there's nothing shady about the $100,000 gift from Webb because he considers Webb a "family friend." The last financial disclosures
Paxton filed with the Texas Ethics Commission showed showed that "family friends" have injected $329,000 into his criminal defense. According to Paxton, those "family friends" fit into a loophole in state law that allows elected officials to accept donations and gifts from anyone with an "independent relationship" to the officeholder. Webb, who admitted no wrongdoing in his DOJ settlement, has given Paxton $355,000 in campaign contributions over the last few years, according to the Texas Tribune.
Nearly one year ago, a Collin County grand jury indicted Paxton on two counts of securities fraud and a count of failing to register as a securities agent. Paxton is accused of tricking people into investing in a tech firm called Severgy that falsely claimed to have created servers that used less energy than any other servers on the market, along with telling investors that the products had already been sold to large companies like Amazon when, in fact, they hadn't been. When Paxton solicited the investors, he didn't tell them he was getting a cut of their money. He has pleaded not guilty to the charges. The Securities and Exchange Commission sued Paxton over these same accusations.
Paxton is the first sitting AG to face criminal charges since 1983, when then Attorney General Jim Mattox
was accused of threatening to destroy a Houston law firm that was looking into questionable campaign loans he made to himself. Mattox was later acquitted.