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Judge’s conduct in Paxton case gets clerk suspended

By   /   November 9, 2015  /   News  /   No Comments

Part 4 of 17 in the series The Problematic Paxton Prosecution
AP file photo

HOLD UP: Texas Attorney General Ken Paxton is battling a fraud indictment.

DALLAS — The apparent mishandling of an indictment of Attorney General Ken Paxton by Judge Chris Oldner got a Collin County court clerk demoted and suspended for a week without pay, according to records filed last week with the court.

Paxton’s defense team filed six separate motions or writs with the Collin County court last week challenging Oldner’s conduct and other aspects of the case.

Oldner recused himself from the Paxton case July 29, shortly after learning that his wife, Cissy Oldner, had been talking about the sealed inidctments that afternoon. She had also been gloating about the indictments in text messages to a friend July 2, the records showed.

“This is exactly what we told you was going to happen to Paxton,” Cissy Oldner wrote to County Commissioner Susan Fletcher.

“Sorry can’t resist,” Oldner wrote, to which Fletcher responded, “you know I’ve never stopped you from venting.”

“This is really more gloating than venting,” Oldner replied.

While the records questioned Oldner’s handling of one of the indictments, it was a clerk who was punished for it.

In his haste to have Paxton indicted before a July 18  statute of limitations had run out, Oldner assembled a grand jury that first convened July 7, after a different grand jury in the spring had passed on indicting him, according to records.

The discussion of the case by the grand jury, Oldner said, would be kept “secret, even from me.”

That afternoon, Oldner brought a brown envelope he said contained a sealed indictment from the new grand jury to the office of the District Clerk. The clerk stamped the document for authenticity, but instead of entering it in the system, Oldner put it back in the envelope and took it with him, according to the records.

According to the clerk’s affidavit:

“He asked me to file mark the indictment and when I was ready to stamp it he said he was only going to pull it out of the envelope far enough for me to see that it was an indictment but he could not reveal the name or any other information concerning the indictment just yet, as it was sealed. I could see a blank for a cause number to be added and ‘The State of Texas’. I did not see any other text of the document, but believed it to be an indictment because Judge Oldner told me it was.”

The clerk’s handling of the document as well as an accidental disclosure of confidential information in an email were grounds for discipline, District Clerk Andrea Stroh Thompson wrote in the clerk’s disciplinary letter July 31.

“You did not obtain permission… to file-mark then release an original document,” Thompson wrote. “In fact, when we subsequently discussed this matter, you could not provide me with a single example of an original file-marked document leaving this office, without at least a copy being left in our possession.”

“Because you did not look at the document you file-marked, you would never be able to verify it was the same document…. Even though it contained your signature on the top right corner, you will never be able to confirm what, if anything was contained in the remainder of the document.”

The remainder of the document was the first indictment of Paxton for rendering services as an investment adviser representative in July 2012 without having registered with the state, a third-degree felony.

A grand jury foreman signed the indictment dated July 7, before the deadline. A printed header said the document entered the system July 28, after the deadline, according to the records.

Oldner improperly entered the grand jury room twice on July 7, Paxton’s attorneys have complained. While prosecutors have contended law doesn’t forbid judges from entering the room when the jury isn’t in deliberations, Oldner’s instructions to the jury excluded judges.

“Only the following persons may be present in the grand jury room,” Oldner told the jury, before listing five types of people that didn’t include judges.

Determining whether or not Oldner did anything improper on July 7 would likely require the court to open or examine the records of the grand jury proceedings on that day.

The flurry of legal filings last week avoided altogether the allegation Paxton committed two felonies by encouraging State Rep. Byron Cook and businessman Joel Hochberg to buy stock in a company called Servergy without volunteering that he was getting stock, too.

Prosecutors have yet to explain how Paxton’s actions constitute fraud, or to cite any law that specifically requires such disclosure.

Then there is the question of whether Paxton committed a crime for failing to register as an “investment adviser representative” before advising a client, James Henry, on July 18, 2012, to invest his savings with Mowery Capital Management.

Mowery had previously registered with federal regulators, who don’t require representatives like Paxton to register. However, on June 25, Mowery registered his business with the state, which requires representatives to register.

Paxton has already confessed to violations before the Texas State Securities Board.

Mowery didn’t tell Paxton he had switched, according to a statement from Deputy Securities Commissioner Ronak Patel filed this past week. Paxton’s lawyers are arguing Paxton was covered by Mowery’s federal registration, which didn’t expire until Oct. 12.

“Mr. Paxton would not have needed to be registered with the state in order to make these referrals during the time period that the firm was SEC registered,” Patel told investigators from Travis County, who looked into the case before dropping it.

If that’s correct, there’s another form that Paxton was supposed to have filled out, but failing to do so isn’t a crime, his lawyers say.

RELATED: Paxton indicted on ‘strange’ legal theory

State Securities Commissioner John Morgan makes it clear in a discussion between Patel and two Travis County prosecutors that regulators almost rarely file criminal charges over registration violations such as Paxton’s.

“I think this thing has turned into a political football,” Morgan told the prosecutors. “I mean, the facts are unremarkable here. We have 290,000 people licensed with us. We see violations frequently on, on different levels… the vast majority of the actions we bring are criminal actions. They’re based on fraud. And we have brought actions for registration violations but they were typically done in the context of individuals who refused to stop, that were part of a systemic fraudulent scheme.”

Contact Jon Cassidy at [email protected] or @jpcassidy000.

Part of 17 in the series The Problematic Paxton Prosecution

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Jon Cassidy was a former Houston-based reporter for Watchdog.org.