Analysis: A Costly Unforced Error for Texas’ Attorney General

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Dang. That Ken Paxton sure seems snakebit.

The Texas attorney general’s latest pratfall was the sort of mistake that your average statewide politician is — or ought to be — too paranoid to make.

Paxton was indicted last year for allegedly steering people to investments without revealing he was being paid to do so. He also faces related federal civil fraud charges from the Securities and Exchange Commission. He and his lawyers say the charges have no merit, and they’re fighting hard to exonerate him.

Now comes the revelation that Paxton accepted a gift from a donor in his home county who wanted to help the AG pay for those lawyers — a donor whose company happened to be accused of cheating the Texas Medicare and Medicaid programs. Preferred Imaging LLC agreed to pay $3.5 million in a settlement with the U.S. Department of Justice after billing questions were raised by a whistleblower. The company admitted no wrongdoing. The AG’s office signed off on the settlement, but never had an open case, a spokesman said,  since the feds were handling it.

James Webb, the company’s CEO, gave Paxton a $100,000 gift last year to help Paxton fight those securities fraud charges. Paxton reported the gift in his annual personal financial disclosure, with a note: “$100,000 gift for legal defense from family friend who meets independent relationship exception.”

Paxton got money from a guy whose company was under investigation by the state and federal government (which, by the way, also means Webb gave a gift to a guy whose office became a signatory in the settlement of the complaint against Webb’s company). Paxton’s office says that the feds took the lead and that the AG’s office was never actively involved in the investigation.

“Our Medicaid Fraud Control Unit is the investigative arm of this office for Medicaid fraud,” Paxton spokesman Marc Rylander said Thursday. “They never received a referral and therefore had no investigation into this organization.”

The AG does not appear to have done anything clearly illegal here, but he and his minions weren’t minding their politics. Maybe they misjudged it or maybe they never thought about it, but someone missed the connection between the gift-giver and the AG’s office, and the boss got sideswiped as a result.

Read this, from the internal guidelines at the Office of the Attorney General (most recently revised in 2009, when Gov. Greg Abbott was the state’s AG): “An OAG employee shall never accept cash, a negotiable instrument, or any item with a value of $50 or more from an opposing party/counsel; any entity that the employee knows is being investigated by the OAG; or any entity the employee knows is interested in or likely to become interested in any contract, purchase, payment, claim, or transaction involving the exercise of the employee’s discretion.”

That’s not law, but it’s safe to say it is something more than friendly advice. It’s an agency directive. The agency is run by a pack of lawyers and always has been. The head lawyer is Paxton. And if he’d known about the federal investigation of Webb’s company and the state's health plans, Paxton might have had second thoughts about accepting a gift.

It’s entirely possible that no official action is needed, that this was a bone-headed move that doesn’t trigger any spankings outside of politics.

Maybe he and his minions misjudged it or maybe they never thought about it, but someone should’ve been asking what the arrangements would look like to outsiders.

So let’s consider the politics. Any dope with a pencil could write the campaign ad attacking the attorney general for this, which raises an interesting question, no matter what you think of Paxton’s pre-existing legal predicament: Why didn’t he or his entourage smell the political risk here?

Maybe he really, really needed the money. It’s possible — even understandable: It cost former Gov. Rick Perry over $2.6 million to erase state charges that he had improperly threatened a Travis County district attorney with a “quit or lose your funding” ultimatum.

Since the things Paxton is accused of doing involve neither his campaign nor his state office, he can’t use campaign funds — as Perry did — to pay his lawyers. The money has to come out of his own pocket, or out of gifts from people who have no official business with the AG — people who are just giving to a friend with no expectation of something in return.

This is the part where the political folks in Paxton World stumbled: What might be a perfectly honest transaction instead looks just like a shady one. There is no way from outside to tell the difference, and that’s how the AG’s political enemies will read it.

This guy can’t seem to catch a break, and it’s his own fault.