Attorney General Ken Paxton agrees to apologize and pay $3.3 million to whistleblowers in settlement

Sign up for The Brief, The Texas Tribune’s daily newsletter that keeps readers up to speed on the most essential Texas news.

---

Attorney General Ken Paxton and four of his former top deputies who said he improperly fired them after they accused him of crimes have reached a tentative agreement to end a whistleblower lawsuit that would pay those employees $3.3 million.

In a filing Friday, attorneys for Paxton and the whistleblowers asked the Texas Supreme Court to further defer consideration of the whistleblower case until the two sides can finalize the tentative agreement. Once the deal is finalized and payment by the attorney general’s office is approved, the two sides will move to end the case, the filing said.

The agreement would bring an end to the lawsuit over the firing of the staffers, but would not end Paxton's legal troubles. The allegations by the former aides of bribery and abuse of office prompted an FBI investigation, though no charges have been filed and Paxton has denied wrongdoing. Separately, Paxton remains under felony indictment on state charges of securities fraud.

In a joint statement, attorneys for three of the whistleblowers — Blake Brickman, David Maxwell and Ryan Vassar — said, “Our clients are honorable men who have spent more than two years fighting for what is right. We believe the terms of the settlement speak for themselves.”

Don Tittle, a lawyer for the other whistleblower, Mark Penley, said in a statement that the case was really important for “how government should function and what we expect out of our public officials.”

“We think this settlement goes a long way toward restoring the good reputations of the men who brought this suit against the attorney general’s office. They should never have been fired in the first place. [T]his settlement confirms that in a big way,” Tittle said.

Paxton, a Republican who won a third four-year term in November, said in a statement that he agreed to the settlement to save taxpayer money and start his new term unencumbered by the accusations.

“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,” Paxton said. “I have chosen this path to save taxpayer dollars and ensure my third term as Attorney General is unburdened by unnecessary distractions. This settlement achieves these goals. I look forward to serving the People of Texas for the next four years free from this unfortunate sideshow.”

The tentative agreement would pay $3.3 million to the four whistleblowers and keep in place an appeals court ruling that allowed the case to move forward. Paxton had asked the Supreme Court to void that ruling.

The settlement, once finalized, also will include a statement from Paxton saying he “accepts that plaintiffs acted in a manner that they thought was right and apologizes for referring to them as ‘rogue employees.’” The attorney general’s office also agreed to delete a news release from its website that called the whistleblowers “rogue employees.”

The final agreement will include a statement saying neither side admits fault or accepts liability in the case, Friday's filing said.

The settlement will be structured to pay Vassar for 27 months of back pay for work he would have done had he not been fired. That will allow Vassar, former deputy attorney general for legal counsel, to claim 27 months of service credit toward his state pension fund.

The attorney general’s office also agreed to stop opposing Maxwell’s bid to change paperwork filed with the Texas Commission on Law Enforcement about his removal as director of the attorney general’s Law Enforcement Division. Such paperwork is important in law enforcement work, and a firing could be a red flag to future employers.

The settlement, which was mediated by attorney Patrick Keel of Austin, is contingent on the approval of funding.

The other whistleblower in the suit, Penley, is a former deputy attorney general for criminal justice.

The payment for the settlement would come out of state funds and has to be approved by the Legislature. After the tentative agreement was made public, state Rep. Jeff Leach, the Republican from Plano who oversees the House Judiciary and Civil Jurisprudence Committee, said he was “troubled that hardworking taxpayers might be on the hook for this settlement between the Attorney General and former employees of his office.”

“I’ve spoken with the Attorney General directly this morning and communicated in no uncertain terms that, on behalf of our constituents, legislators will have questions and legislators will expect answers,” Leach said in a statement to The Texas Tribune.

The whistleblower lawsuit was filed after eight former top deputies to Paxton accused him of bribery and abuse of office in October 2020 and reported Paxton’s alleged actions to authorities. All eight of those employees either were fired or resigned.

In November 2020, four of those former employees filed a whistleblower lawsuit claiming Paxton had improperly retaliated against them after they accused him of criminal acts. They sought reinstatement and compensation for lost wages, as well as pay for future lost earnings and damages for emotional pain and suffering.

Filings in the whistleblower suit revealed more details about the crimes the former employees alleged Paxton committed, including doing political favors for real estate developer Nate Paul, a friend and political donor who gave Paxton $25,000 for his 2018 campaign. The allegations said Paul helped Paxton with a home remodel and by hiring Paxton’s alleged girlfriend. Paxton is married to state Sen. Angela Paxton, R-McKinney.

The whistleblowers claimed Paxton pushed to have the attorney general’s office get involved in Paul’s legal disputes, even when lawyers in the office advised against it. Paxton pushed to get involved in a real estate deal involving one of Paul’s companies and an Austin charity, and appointed a special counsel to look into claims Paul made that state and federal law enforcement had improperly raided his home in 2019. Lawyers in the attorney general’s office had found “no credible evidence” that Paul’s rights were violated, but the special counsel was appointed over their objections.

The whistleblowers said the special counsel, Brandon Cammack, then obtained more than three dozen subpoenas targeting people they believed to be Paul’s enemies.

Two weeks ago, three of the four plaintiffs in the whistleblower lawsuit — Penley, Maxwell and Vassar — asked the Texas Supreme Court to put their case on hold while they negotiated a settlement with Paxton. Brickman initially opposed the motion but signed on to the settlement agreement filed with the court Friday.

Brickman did not participate in the mediation but agreed to sign on to the settlement after the inclusion of some “significant non-monetary terms,” his lawyer Tom Nesbitt said.

“We are pleased with this outcome,” Nesbitt said.

Paxton has argued in state court that he is exempt from the Texas Whistleblower Act — written to protect government employees from on-the-job retaliation by other employees after reporting misconduct — claiming that he is an elected official, not a public employee. He also said he fired the employees not in retaliation for their complaint but because of personnel disagreements. An appeals court has ruled against him and allowed the case to move forward. Last January, Paxton appealed his case to the Texas Supreme Court.

The whistleblower suit isn’t Paxton’s only legal problem.

Paxton is still facing felony securities fraud charges tied to private business deals in 2011. He has denied wrongdoing in the nearly 8-year-old case.

The Texas State Bar also sued Paxton last year for professional misconduct for allegedly misrepresenting that he had uncovered substantial evidence of fraud in a bid to overturn Democrat Joe Biden’s election victories in four battleground states. Paxton has denied wrongdoing and criticized the suit as politically motivated.

Patrick Svitek contributed to this report.