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Texas AG Paxton to Pay $3.3M in Whistleblower Settlement

The settlement agreement will pay four former staffers who alleged retaliation after they accused Paxton of corruption in 2020. Paxton has broadly denied any wrongdoing and has not been charged with a federal crime.

Texas Attorney General Ken Paxton
Texas Attorney General Ken Paxton listens as wife Sen. Angela Paxton thanks the crowd after winning her election on Tuesday, Nov. 8, 2022, at Haggard Party Barn in Plano, Texas. (Juan Figueroa/The Dallas Morning News/TNS)
(TNS) — The office of Texas Attorney General Ken Paxton has reached a settlement agreement with whistleblowers who alleged retaliation after they accused him of serious crimes.

Paxton, a Republican who was reelected last year, will apologize and the state will pay the whistleblowers $3.3 million, according to settlement documents filed Friday morning.

The agreement notes the settlement was mediated and is contingent “upon all necessary approvals for funding.” It is likely that the Texas Legislature will need to approve of and budget the money out of state funds.

The final settlement will include a line that states, “Paxton accepts that plaintiffs acted in a manner that they thought was right and apologizes for referring to them as ‘rogue employees.’” His office will also delete a press release criticizing the whistleblowers, all of whom served a top aides to Paxton.

The document states that entering in a settlement means there is no admission of “liability or fault” by any party.

The Dallas Morning News obtained a copy of the document from a party to the lawsuit. All four whistleblowers, who filed the lawsuit in late 2020, signed on to the agreement.

Paxton issued a statement through an agency spokesman soon after the settlement terms were filed Friday.

“After over two years of litigating with four ex-staffers who accused me in October 2020 of ‘potential’ wrongdoing, I have reached a settlement agreement to put this issue to rest. I have chosen this path to save taxpayer dollars and ensure my third term as Attorney General is unburdened by unnecessary distractions,” he said. “This settlement achieves these goals. I look forward to serving the People of Texas for the next four years free from this unfortunate sideshow.”

Paxton’s agency paid private lawyers more than $463,000 to work on the case.

The deal stands to resolve one of several major legal problems that have dogged Paxton for years, and represents a unusual concession from the typically unyielding attorney general.

The whistleblowers were among a group of senior employees who accused the attorney general of abusing his office to help campaign donor and real estate developer Nate Paul. In their lawsuit, they also accused Paxton of having an affair with a woman who worked for Paul. The allegations prompted an FBI investigation. It’s unclear where the federal probe stands; no charges have been filed.

Paxton denied their abuse of office allegations and said the ex-employees were perpetrating a politically-motivated witch hunt against him. His agency also produced an unsigned report purporting to clear Paxton of wrongdoing.

The public allegations put Paxton, already under indictment for unrelated fraud charges, under a microscope as he faced re-election last year. Three fellow Republicans challenged him for his job, accusing Paxton of serious ethical lapses, but he beat them back and handily won a third term to office in November.

The case had been before Texas Supreme Court after a lower appeals court has ruled against Paxton’s argument that whistleblower laws don’t apply to him and other elected officials. The settlement asks the high court to pause consideration of the case and let lower court ruling stand.

The whistleblowers are former Deputy Attorney General for Criminal Justice Mark Penley, former Deputy AG for Legal Counsel Ryan Vassar, former Deputy AG for Policy and Strategic Initiatives James “Blake” Brickman and former Director of Law Enforcement David Maxwell.

TJ Turner, an attorney for Maxwell, said in a statement to The News: “The whistleblowers sacrificed their jobs and have spent more than two years fighting for what is right. We believe the terms of the settlement speak for themselves.”

Brickman was not involved in the mediation discussions and intended not to settle. He reversed course after the negotiation of “non-monetary terms,” his attorney told The News.

“We are pleased with this outcome,” said Tom Nesbitt, Brickman’s attorney.

Grant Dorfman, deputy first assistant attorney general, signed the document on behalf of Paxton’s agency.

Paxton’s separate fraud indictments remain active. He stands accused of persuading friends to invest in a McKinney technology company without telling them he received shares of stock, and of funneling clients to a friend’s investment firm without being properly registered with the state.

He was charged with two first-degree felonies, which each carry penalties of 5 to 99 years in prison and fines, and one third-degree felony.

After more than seven years, Paxton has not yet gone to trial on these charges. He has denied all wrongdoing.

©2023 The Dallas Morning News. Distributed by Tribune Content Agency, LLC.
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