Texas attorney general accused of lying to investors

McKINNEY, Texas -- Texas Attorney General Ken Paxton had an investment opportunity: a tech startup making data servers. He told people he had put his own money into Servergy Inc., according to prosecutors, and helped persuade a state lawmaker and a wealthy businessman to buy more than $100,000 in shares.

All the while, Paxton was being compensated by Servergy, according to an indictment unsealed Monday, the same day the state's top law enforcement officer turned himself into jail on securities-fraud charges. The alleged deception took place before Paxton took office in January. If convicted, the rising Republican star could face five to 99 years in prison.

It was a low moment for a tea-party favorite who is barely seven months on the job and whom GOP presidential candidate Ted Cruz candidate called a "tireless conservative warrior" when Paxton ran for office last year.

Attorneys for Paxton, 52, said he will plead not guilty to two counts of first-degree securities fraud and a lesser charge of failing to register with state securities regulators.

"He is looking forward to the opportunity to tell his side of the story in the courtroom," said Dallas attorney Joe Kendall, adding a judge instructed Paxton's lawyers not to comment further.

A frenzy of media outside the Collin County jail in Paxton's hometown was reminiscent of a year ago, when then-Texas Gov. Rick Perry was booked after being indicted on charges of abusing his power with a 2013 veto. But whereas Perry welcomed the cameras at jail, Paxton ducked reporters after his booking, driving away in a black SUV.

Nor did top Texas Republicans rush to Paxton's side with the same outrage as they did with Perry, whose case has not yet gone to trial. Republican Gov. Greg Abbott, who last held the attorney general job, issued only a brief statement that urged the justice system to play out.

"I recognize this is the first step in a lengthy process and will respect that process as it moves forward," Abbott said.

The Collin County normally jail makes suspects wear a towel around their neck before taking their mug shot. Paxton was allowed to be photographed without one, allowing his suit and red tie to be part of his booking photo.

Just as Perry was allowed to finish his term after his indictment, Paxton can stay on the job while his criminal case proceeds.