A newly uncovered deposition raises fresh questions about how Republican U.S. Senate candidate Ken Paxton, Texas’ longtime attorney general, amassed his personal fortune and some of the remarkable explanations he offered under oath.
The story comes from Lauren McGaughy, Texas politics correspondent for The New York Times.
McGaughy joined the Standard with more about what she learned from the deposition.
This transcript has been edited lightly for clarity:
Texas Standard: You’ve been following Ken Paxton’s legal troubles and financial dealings for years. What did you find in this deposition that you uncovered that you didn’t know before, and why is it coming to light now?
Lauren McGaughy: Sure, you know, this deposition is 12 years old. If people remember — if they’re following like me — back in the day, the feds actually investigated Paxton for alleged securities fraud. And he sat for a deposition, answered questions under oath in that case.
And there were some interesting things in there that I learned. You know, he actually said that he got a lot of pitches for investments as a state lawmaker, and that he was sometimes inundated with these things, and he would farm them out to his legislative staff, who would sift through them and decide whether they looked good. That was one thing that was interesting.
Another thing is, it kind of resurfaced this story about the business that was at the center of this case, Servergy Inc. It was a McKinney startup. And Paxton said he received 100,000 shares for that company from the CEO — for free.
In the deposition, Paxton said he was ready to invest his own cash, but the CEO said, “I don’t want your money. God doesn’t want me to take it.” So he told that to federal investigators under oath in this deposition.
Alright, spell out why you see that as especially revealing. You’re talking about two events there. One is the relationship between his public office and his private business dealings where he’s farming this out to his legislative staff.
But this is really striking how you recount God wanted him to have this money. Say more about what that reveals to you.
Well, it was really at the heart of this civil investigation into Paxton. The feds believed that Paxton was illegally funneling investors to this business without telling them that he was getting some kind of a commission. Paxton said that wasn’t true because the commission was essentially a gift, a free 100,000 shares that eventually were worth about $200,000.
So I thought it was revealing to hear him say that under oath. You know, the story about the free shares have been out there in the public before, but he’d never answered questions about it under oath that we knew about, so that was definitely revealing.
I also spoke to an ethics expert who told me that, you know, Paxton never disclosed those shares as a gift. He only disclosed them as stock. And that might violate state ethics rules as well.
Well, you’ve watched Paxton survive lots of political controversies that might have ended other politicians’ careers, and now he’s running statewide against a candidate who’s making integrity an issue.
Is there anything about what you’ve learned that suggests to you that Paxton’s past could finally become a serious political liability, or do you think Texas voters have already made up their minds about this candidate?
I think we’re going to have to wait and see. I think you and I both know that for a long time, elections in the state can feel a bit like a fait accompli.
This year does feel different. All of the polling suggests that we’re in a dead heat. And so I think it really depends what happens in the next three weeks.
And I would not put my money on either one at this point. I wouldn’t be surprised either way if Talarico wins or if Paxton pulls out a win, despite his baggage.
I think you’re pointing to the backdrop right now where a lot of polls have not just this race being close, but races in a lot of states and in deep red states where Republicans would in any other year seem to have an advantage.
What’s your own personal take as to what we’re looking at in November? I mean, there’s been a long drought of Democrats being elected to statewide office. Do you sense that there is a fundamental shift that’s taking place?
Well, you know, we have to remind people that one win in one race — whether it’s the U.S. Senate race or some other one for Democrats — doesn’t mean the state is turning blue all of a sudden. It’s a single win.
You know, if they can pull out a win, it will really put a lot of wind in their sails. It will mean a lot more national money will come into the state and they’ll have a better chance the next time around.
If Democrats don’t pull out a win this time, they would have to kind of pull themselves up by their bootstraps. It does feel different this year, and I think there’s some real hope amongst Democrats that they can pull out at least one victory.
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