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Texas Attorney General Ken Paxton intervened in donor’s legal affairs multiple times this year

Dallas Morning News logo Dallas Morning News 10/29/2020 Lauren McGaughy and Allie Morris, The Dallas Morning News
Jeff Mateer wearing a suit and tie: Jeff Mateer, shown here entering the Eldon B. Mahon U.S. Courthouse in Fort Worth in 2016, resigned from his position as first assistant attorney general in October 2020 after he and several other top agency staffers accused Texas Attorney General Ken Paxton of serious crimes. © Nathan Hunsinger/Staff Photographer/The Dallas Morning News/TNS Jeff Mateer, shown here entering the Eldon B. Mahon U.S. Courthouse in Fort Worth in 2016, resigned from his position as first assistant attorney general in October 2020 after he and several other top agency staffers accused Texas Attorney General Ken Paxton of serious crimes.

AUSTIN — For years, Jeff Mateer served as Attorney General Ken Paxton’s loyal second in command, handpicked to run the agency’s daily operations. But this summer, Mateer began to have serious qualms about his boss' behavior.

Paxton appeared to be taking a special interest in Nate Paul, a Texas real estate developer and campaign donor who was under federal investigation. In July, Mateer said, he learned Paxton wanted to personally appear in court to argue a charity’s lawsuit against Paul’s businesses should be put on hold.

Attorneys general almost never show up for such lawsuits, and since the case involved a campaign donor, Mateer said he considered the circumstances suspect.

“I was shocked,” Mateer told The Dallas Morning News in his first in-depth interview since he stepped down this month. “That, in my memory, no attorney general has ever done.”

The incident was not isolated.

This year, Paxton has personally intervened at least four times on a range of legal matters before his agency that involved or helped Paul, including at least one previously unreported incident in early spring, The News has learned. Experts say that level of involvement from the attorney general, the state’s top lawyer, is highly unusual and potentially unethical.

Some of Paxton’s top deputies claim it is criminal.

Seven of the agency’s most senior employees, including Mateer, have reported Paxton to law enforcement and accused him of serious crimes — bribery, abuse of office and improper influence. They said Paul is trying to use the attorney general’s office for personal gain — and that Paxton is letting him.

The allegations spell more trouble for the embattled attorney general, who has been under indictment on separate securities fraud charges for five years. But despite calls to resign, the second-term Republican is refusing to step down.

Paxton has denied all wrongdoing, instead pointing the finger back at staff he said had gone rogue. His campaign spokesman, Ian Prior, defended Paxton’s interventions, and said they were separate issues that “Mateer is deceptively conflating to help push his false narrative.”

He did not answer other questions about Paxton and Paul’s connections.

The Records

It’s unclear how or when Paxton met Paul, whose home and business were raided by the FBI in August 2019. But the link between the two men became apparent to Paxton’s top staff this spring during a fight over public records related to the raid, according to one of the seven employees who has accused Paxton of criminal acts.

Joe Larsen, an attorney who works for the same firm as Paul’s criminal defense lawyer, asked the Texas Department of Public Safety in March to turn over any internal communications about Paul, his businesses or home, according to agency and court records released to The News. One of the department’s employees participated in the FBI raid.

Paul has accused the agents of conducting the search without proper authority.

The Department of Public Safety refused to release records to Larsen, saying they were part of an active investigation. It hasn’t been made public what law enforcement was investigating.

The battle escalated to Paxton’s agency, which makes decisions about what government documents are releasable to the public.

Paxton became personally interested in the quarrel and began asking staff questions about the records request, according to one of the seven employees who accused Paxton of criminal acts and requested anonymity to speak about this incident.

Attorneys general rarely get directly involved in the thousands of records debates the agency settles every year, so his participation was curious, this individual said, and senior staff became concerned upon finding out that Paul contributed $25,000 to Paxton’s re-election campaign in 2018.

The attorney general’s office deferred to the courts after Larsen sued the Department of Public Safety for the documents. There has been no movement in that lawsuit since June, court records show.

Larsen did not describe himself as Paul’s attorney in court or public records filings. He did not return requests for comment.

Paxton’s interest in the issue was not out of the ordinary, his spokesman said.

“The Attorney General asks questions of his staff about a variety of issues, big and small, every single day and he will continue to do so,” Prior told The News.

The Intervention

Then, in early June, Paxton waded into a legal battle between an Austin nonprofit and Paul-controlled entities, according to interviews and court records.

The attorney general’s office can intervene in lawsuits involving charities to protect the public interest. In this case, it seemed like Paxton’s office was representing Paul, said the nonprofit’s lawyer Ray Chester.

Top agency attorneys pushed the Roy F. and Joann Cole Mitte Foundation to settle a financial dispute with the Paul-controlled entities for “pennies on the dollar” compared to what the nonprofit was owed under an earlier $10.5 million agreement, Chester said.

“It was very clear all along this was coming straight from Paxton,” he added.

Paul’s lawyer, Michael Wynne, said the Mitte Foundation was misusing its charitable funds to keep litigating and refused to engage in any meaningful resolution.

Paxton seemed to agree. Prior, his campaign spokesman, told The News Thursday that the state agency’s intervention was an effort to “encourage a settlement to stop the wasting of assets that were being diverted from charitable beneficiaries to lawyers.”

The attorney general was so interested in the case that he planned to personally argue a motion in Travis County court, Mateer said; senior staff talked Paxton out of it. But his plan was so concerning, Mateer said, he met in person with Paxton on July 22 and asked him to cut all ties with Paul. He said Paxton agreed.

“I was hopeful that General Paxton was not going to have any further personal involvement with any matters that the office was handling that relate to Mr. Paul,” Mateer told The News.

Mateer said it was a promise Paxton did not keep.

Less than two weeks later, Paxton directed staff to rush a legal opinion in a move that raised red flags for employees and helped Paul avoid foreclosure sales on several properties in Texas, The Austin American Statesman reported.

Paxton’s spokesman said the attorney general was concerned about people having their properties foreclosed during the COVID-19 epidemic.

“They would not have an opportunity to get maximum value on their homes because of the rules put in place limiting the number of people that could attend a foreclosure due to COVID-19 restrictions,” Prior told The News.

The Investigation

Meanwhile, throughout the summer, seven top staffers say Paxton was helping Paul go after the state and federal agencies investigating him. This would ultimately lead them to accuse their boss of serious crimes.

At Paxton’s request, staff at the Travis County District Attorney’s Office in May listened to Paul’s complaints of misconduct by the FBI and Department of Public Safety. The staff determined they could not send it to either agency for investigation, so they referred Paul’s request to the Office of the Attorney General on June 10.

Top staff there said they looked into the matter, but alleged Paul turned down requests to provide documents or other proof of his claims. Worried that Paul was trying to use the agency for his own personal and financial gain, they told Paxton about the businessman’s refusal to cooperate and recommended not advancing the investigation.

But Paxton disagreed.

In early September, Paxton brought on an outside attorney to keep investigating Paul’s complaint. It is unclear how Paxton decided to give the job to Brandon Cammack, a criminal defense attorney in Houston with five years experience, although he too has links to Paul. Cammack has served on at least one Houston organization with Wynne, Paul’s lawyer.

Cammack began his work in September, drafting subpoenas, interviewing private investigators and preparing to question witnesses and suspects, according to an invoice obtained by The News.

He served several subpoenas by the end of the month, including at least one to a Central Texas bank which had lent Paul’s businesses money, before top agency staff told him to stop. Mateer warned Cammack that his employment agreement was invalid and Paxton may have signed it “under duress.”

On Oct. 1, Mateer and six other senior officials sent a whistleblower letter to the agency’s human resources director accusing Paxton of several crimes. In a text message, Mateer told Paxton their concerns stemmed from his relationship with Paul.

The Department of Public Safety said the allegations were referred to the FBI, which declined to comment.

Paxton has responded to the staff mutiny by promising to launch his own probe.

“Making false claims is a very serious matter and we plan to investigate this to the fullest extent of the law,” Paxton said. At least two employees are now on investigative leave and, according to The Texas Tribune and Houston Chronicle, two were fired. Mateer resigned before news of the scandal broke.

Reacting to the uprising, Travis County District Attorney Margaret Moore questioned Paxton’s handling of the investigation and said her office would have no further involvement. Paxton’s agency dropped the inquiry the next day, saying it didn’t have the authority to continue without the local prosecutor.

On Thursday, Prior questioned why Mateer was “so unwilling” to investigate Paul’s complaint. He said the attorney general brought Cammack on to look into whether Paul’s constitutional rights and other state laws were violated “based on a search and seizure that led to no criminal charges.”

It’s not clear whether the FBI is still investigating Paul, but the agency has brought no charges to date.

Wynne maintains Paul was mistreated by Paxton’s staff, including being “berated and insulted” by the agency’s director of law enforcement. He said the agency was ultimately unhelpful.

“The contention that the [agency’s] intervention somehow benefitted my client is preposterous,” Wynne told Paxton in an Oct. 11 letter. Its involvement, he added, “only served to create confusion, frustrate any resolution, and add to false media reporting about these events.”

Top GOP officials called the new allegations against Paxton concerning.

Paxton already faces separate first-degree fraud charges stemming from accusations he misled investors in a North Texas tech startup before his time as attorney general. He also is charged with a third-degree felony for allegedly funneling clients to a friend’s investment firm without being registered with the state.

Paxton was indicted in 2015 but has not yet faced trial. He denies all the allegations.

The Aftermath

The News spoke with three former high ranking state government officials who said Paxton’s pattern of behavior is highly unusual and should be investigated.

“It stinks to high heaven,” said Linda Eads, a professor emeritus of law at Southern Methodist University who served as the deputy attorney general for litigation under Attorney General John Cornyn.

It’s not unheard of to bring in outside counsel, she added, but normally only when the agency’s attorneys lack experience in a certain subject matter or don’t have the manpower. Together with his other interventions, Eads said the behavior is suspect.

“The way [Paxton has] been involved in all of this should not have happened,” she said.

Shane Phelps, who headed the criminal justice division under Cornyn and handled special investigations for his predecessor, said it’s typically not the attorney general’s job to investigate federal agencies.

“What are you going to do, indict the FBI?” he asked.

Phelps added even if Paxton has done nothing improper, if someone can make the argument that it looks that way, “you’ve lost already.”

Claire Bow, a lawyer who led another state agency, said she had not seen any attorney general behave like Paxton in her nearly three decades of government service.

“I can’t think of any legitimate purpose for what he’s done,” said Bow, who served a decade as an assistant attorney general. “He seems to have crossed all the lines and put himself out on a limb.”

All three said Paxton should be investigated by an independent, outside party.

“You need to clear the air by bringing somebody in who is really respected to investigate what happened and to issue a clean bill of health,” Eads said, “or an indictment.”

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©2020 The Dallas Morning News

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