Last Tuesday, a Texas grand jury indicted 52-year-old Texas Attorney General Ken Paxton on three counts of securities fraud. Paxton, sworn in on January 1, 2015, was previously a member of the Texas House of Representatives. The alleged illegal conduct arose while he was a member of the legislature and a private lawyer, and is connected to Paxton’s work soliciting clients and investors on behalf of two companies.

Yesterday morning, Paxton surrendered at the Collin County Jail to be booked. Bail was set at $35,000, and Paxton posted bond and was released. Paxton has been charged with two counts of securities fraud more than or equal to $100,000, a first-degree felony, and one count of failure to register with the state securities board as an investment advisor, a third-degree felony. In an ironic twist, as a state representative in 2003, Paxton voted in favor of changing Texas law to make it a felony for investment agents to fail to register. In Texas, a first-degree felony can result in 5 to 99 years in prison and a third-degree felony carries a possible range of punishment of 2 to 10 years.

The two counts of fraud Paxton committed according to the indictment occurred when Paxton sold more than $100,000 in stock to fellow Texas state representative Byron Cook and Florida businessman Joel Hochberg without revealing that he would make a profit from their investment. He also allegedly failed to disclose that he had already been compensated with 100,000 shares of the company and that he had not put any of his own money into the company. Commentators have already deemed these charges an “uphill battle” for the prosecution because fraudulent omission cases are more difficult to prove than fraudulent misrepresentation in securities cases: the facts will have to show that “information [Paxton] kept from clients during his time as an investment adviser was important enough to constitute a criminal omission.”

Last May, Paxton acknowledged the underlying conduct at issue for the third charge, failure to register, and admitted to the Texas State Securities Board that he had solicited clients for Mowery Capital Management (“MCM”) without abiding by the law requiring state registration. Paxton might have a harder time fighting this charge because of this admission. (As the New York Times has pointed out in yet another ironic twist, Paxton’s Attorney General website informs consumers that a “common theme of investment scammers” is that they are “not likely to be registered” with the Board.) The Texas State Securities Board disciplined him because he acted as an “investment advisor.” Paxton was reprimanded, paid a civil fine of $1,000, and called it an administrative error. The Texas State Securities Board order states that, “Respondent was compensated by MCM for each solicitation resulting in a client relationship with MCM. Specifically, MCM agreed to pay Respondent 30 percent of asset management fees collected by MCM from each client that Respondent solicited successfully.”

Despite the discipline action, the Texas State Securities Board did not refer Paxton for criminal charges. Texans for Public Justice, the same watchdog group that filed a complaint against former Texas Governor and current presidential candidate Rick Perry (who is currently still facing one felony count) deemed the Securities Board’s punishment insufficient and requested a criminal investigation. After the Travis County District Attorney referred the Paxton case to Collin County (where the alleged acts took place), Collin County District Attorney Greg Willis recused himself. Houston defense attorneys Brian Wice and Kent Schaffer were appointed as special prosecutors on the case, and a Texas Rangers investigation followed. Wice is well-known for representing former Republican House Majority Leader Tom DeLay, and securing a reversal of Delay’s conviction for violating Texas campaign-finance laws.

As the cases against now second-time Republican Presidential candidate Perry and former Majority Leader DeLay demonstrate, Texas politics can be hardball. In fact, Paxton has joined a long list of Texas politicians who have faced criminal charges. Our blog will keep you posted on the case.