The politically motivated case against Texas’ conservative attorney general hinges on the accusations of a liberal state representative … who is himself facing allegations of fraud.

State Rep. Bryon Cook (R-Corsicana) recently walked back accusations he made against Texas Attorney General Ken Paxton, thus blowing a hole in the civil case brought against Paxton by the Obama Administration’s Securities and Exchange Commission. Cook is the SEC’s lead witness. Fraud allegations against Cook in a separate Collin County lawsuit may explain why Cook was forced to abandon his claims.

In an email exchange between Matthew Martens, a lawyer for Texas Attorney General Ken Paxton, and Terry Jacobson, a lawyer employed by Byron Cook (R–Corsicana), Jacobson conceded that Cook, along with his long-time business partner Joel Hochberg, never considered Paxton to be their broker.

More astoundingly, Cook’s attorney conceded there was never a “formal investment group” involving Cook and Paxton but rather an “ad hoc arrangement where, from time to time, good friends might invest in the same transaction” with the particular participants varying from transaction to transaction.

That confession flies directly in the face of the claims brought against Paxton by the Securities and Exchange Commission. The SEC, citing Cook as its witness, has alleged that Paxton and Cook participated in a formal investment club with established rules that required members to disclose if they were receiving compensation related to a transaction.

Cook’s reversal-of-course regarding the nature of the investment group makes sense only in light a fraud suit brought against him and his business partners in Collin County. Amongst that suit’s allegations is that Cook engaged in self-dealing transactions involving other state representatives who would presumably be part of the “investment group.”

The plaintiff in that lawsuit is seeking more than $1 million in damages. But still, that suit is not a suit by a state or federal regulator, nor is it a criminal indictment.

It appears Cook may fear his own criminal culpability if he continues to testify that he and Paxton were part of a formal investment club in which the various members had a duty to disclose their personal interests. Such a standard would surely mean that Cook’s participation in self-dealing transactions, if proven true, would amount to an actual violation of the felony securities laws he has claimed Paxton violated.

Tony McDonald

Tony McDonald serves as General Counsel to Texas Scorecard. A licensed and practicing attorney, Tony specializes in the areas of civil litigation, legislative lawyering, and non-profit regulatory compliance. Tony resides in Austin with his wife and daughter and attends St. Paul Lutheran Church.