Texas AG Ken Paxton to strike a deal on securities fraud charges? Here's how we got here.

Embattled Attorney General Ken Paxton is due in a Harris County state District Court on Tuesday morning for a pretrial hearing before his scheduled April 15 trial on three felony securities fraud charges, but Paxton and state prosecutors could reach a deal to resolve the nine-year-old case, people familiar with the negotiations confirmed to the American-Statesman.

Paxton's attorneys and prosecutors are said to be considering a proposal to dismiss Paxton's felony charges if he completes the terms of a deferred prosecution agreement, three people familiar with the bargaining but not authorized to speak about the deal told the Statesman.

Those terms could include completing community service, taking advanced legal education classes and paying restitution. Previously, two sources told the Statesman the restitution could be between $300,000 and $400,000.

More: What is a ‘deferred prosecution agreement’? Here's what Texas AG Ken Paxton could receive.

Paxton, a 61-year-old Republican, could face up to 99 years in prison if he is convicted on the three charges stemming from accusations that he courted investors for a Dallas-area tech startup in exchange for shares in the company while he was not registered to do so and for not informing the new clients of the financial incentive, according to court documents.

Here's a look at the timeline of Paxton's securities fraud charges that have followed him in his rise from a member of the Texas House to becoming the state's three-term attorney general.

Texas State Securities Board reprimands Ken Paxton

As Paxton was running for his first term as attorney general, the Texas State Securities Board in May 2014 reprimanded Paxton and assessed him a $1,000 administrative fine for failing to register as an "investment adviser representative" while soliciting clients for Mowery Capital Management — a securities violation dating back to 2004, according to the board.

In three separate, successful solicitations, taking place in 2004, 2005 and 2012, Paxton secured clients on behalf of the firm based in McKinney, Paxton's hometown, during a time in which he represented Collin County in the Texas House. Paxton was in line to receive 30% of the asset management fees collected by the firm from each client that he successfully brought in, according to the official reprimand issued by the securities board in 2014.

Paxton won the attorney general's office in November 2014, and won reelection to a second and third term in 2018 and 2022, respectively.

Collin County grand jury indicts Paxton

On Aug. 3, 2015, seven months into his term as attorney general, Paxton turned himself in to the Collin County jail after a grand jury handed up indictments accusing him of committing three securities fraud felonies.

Paxton was charged and arrested for two first-degree felonies over accusations that he assisted a Dallas-area tech startup, Servergy, by recruiting investors to purchase shares in the company while failing to disclose he was being paid by the company to do so, and a third-degree felony for not registering with the state securities board to solicit clients.

Paxton, according to court records, was in line to receive payments of $100,000 in stock compensation for securing each of the two new investors.

After Paxton turned himself in to the Collin County jail, where he was booked, photographed and fingerprinted in about 20 minutes, he pleaded not guilty to defrauding investors and to working on behalf of an investment firm without having had the appropriate license.

Stemming from the accusations that led to the state-level charges, the U.S. Securities and Exchange Commission in a civil complaint in 2016 said Paxton "exploited personal and business relationships with prospective investors for profit.”

In 2017, U.S. District Judge Amos Mazzant III dismissed the SEC complaint.

Almost a decade of delays in Paxton's case

Ever since the Collin County grand jury indicted Paxton in 2015, there has been a constant legal fight over the minutiae in Paxton's case, leading to a nine-year delay to getting to trial.

For years, the case has gone through active spurts — including motions to dismiss the case, seek different presiding judges, and push an issue over the state's special prosecutors' pay — before turning dormant as appeals courts considered the procedural issues brought by the defense team and prosecutors.

In 2017, the special prosecutors' pay was blocked by a court order due to a disagreement with Collin County commissioners who objected to the $300 hourly rate that a former judge on the case had negotiated.

That yearslong issue has remained, resulting in prosecutor Kent Schaffer, who had been on the case since its began, announcing last month that he was withdrawing from the proceeding out of concern that his work would continue to go unpaid.

"This isn’t a passion project," he said after the hearing in Houston in February.

The Court of Criminal Appeals has also been asked to consider and rule on issues in the case throughout the years, ranging from the fee dispute, jurisdiction concerns and Paxton's motion for a review of the case in an effort to have it tossed out.

The court rejected Paxton's request for dismissal and finally settled the trial venue, ruling in 2023 that the case be heard in Harris County after it was allowed to shift back to Collin County in 2020.

Other reasons for case delays, according to court documents, include Hurricane Harvey's destruction in the Houston area in 2017 and the COVID-19 pandemic.

Texas Senate clears Paxton of wrongdoing after impeachment trial

During an impeachment trial in the Texas Senate in September, Paxton faced 16 charges accusing him of abusing his office in a mutually beneficial relationship with since-incident Austin real estate developer Nate Paul.

Those concerns, brought up by former top aides in Paxton's office, formed the basis for the House to overwhelmingly vote on May 27 to impeach Paxton on 20 charges, including bribery and abuse of office, and to forward the inquiry to the Senate for a trial.

The Senate transitioned into an impeachment tribunal last summer to consider the accusations, except for four impeachment articles tied to Paxton's ongoing securities fraud charges.

At the conclusion of the two-week trial, senators cleared Paxton of wrongdoing, largely along party lines, with all charges, including the four related to the securities fraud allegations that the chamber never heard, being dismissed.

Prior to the impeachment trial's start, the state's prosecution of Paxton's securities fraud charges had progressed with a pretrial conference.

Additionally, a month before the Senate trial, federal prosecutors had seated a grand jury to hear testimony from witnesses close to Paxton. While the motivation for the federal probe into Paxton remains unclear, it followed an initial inquiry beginning in 2020 in response to the agency whistleblowers' allegations.

Hearings in Houston

Leading to Tuesday's hearing in front of District Court Judge Andrea Beall in downtown Houston, the long running dispute over the venue where Paxton's securities fraud charges would be aired has largely kept him out of a courtroom over the past decade.

Moving the proceeding from Collin County to Harris County in 2017, the venue shift helped spur a multi-year battle over the case's jurisdiction, disputes over its presiding judge and various motions to quash the state's prosecution, but after the Court of Criminal Appeals (Texas' highest criminal court) ruled last year that the case could move forward in Harris County, resulting in a hearing in October, a trial date was finally set for April 15.

More: Exclusive: Texas AG Ken Paxton could see criminal charges dropped in deal with prosecutors

On Feb. 6, days ahead of a scheduled pretrial conference, Paxton's team filed a motion to toss out the felony case entirely, saying Paxton was denied a speedy trial. Prosecutors in their response afforded little credit to that argument saying Paxton had never before raised that concern.

Beall denied the motion and reconfirmed that a hearing would take place in April.

Ahead of the final pretrial hearing Tuesday morning, the American-Statesman reported that Paxton and prosecutors may come to a deferred prosecution agreement to dismiss the attorney general's felony charges.

More: Paxton finds success in Court of Criminal Appeals races, unseating incumbents in a sweep

Under the potential deal, which could be agreed to Tuesday morning and does not require Beall's approval, Paxton would not have to formally enter a plea but must not violate any law for an extended period.

This article originally appeared on Austin American-Statesman: Deal may end AG Ken Paxton's securities fraud case. Here's the history