House panel investigating AG Ken Paxton’s office; Paxton calls on Speaker Dade Phelan to resign

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A Texas House committee revealed Tuesday it was investigating the office of Attorney General Ken Paxton over his push for $3.3 million in taxpayer dollars to settle a whistleblower lawsuit from former deputies who had accused Paxton of misconduct.

The news came hours after Paxton called on the House speaker, Dade Phelan, to resign over alleged drunkenness while leading the House, a remarkable moment of acrimony between two of Texas’ top Republicans.

Phelan’s office fired back, noting the investigation has been going on since March.

“The motives for and timing behind Paxton’s statement today couldn’t be more evident,” Phelan spokesperson Cait Wittman said in a statement. “Mr. Paxton’s statement today amounts to little more than a last ditch effort to save face.”

The series of events underscored the new legal jeopardy Paxton is facing on top of his already yearslong run of scandals. The House Committee on General Investigating has broad authority to probe alleged misconduct in state government and can initiate impeachment proceedings against a state officer.

The drama also underscored the political divide between Phelan and the vocally conservative Paxton, who hails from a wing of the Texas GOP that persistently criticizes the House as insufficiently conservative. Paxton is a loyalist of former President Donald Trump; Phelan is skeptical of Trump’s hold on the party.

News of the House investigation was initially revealed during a brief public meeting of the House Committee on General Investigating on Tuesday afternoon. The panel unanimously voted to issue two subpoenas in “Matter A” — one to “John Doe No. 6” and the other to Paxton’s office. The committee is scheduled to meet again at 8 a.m. Wednesday to hear testimony in the matter.

The committee also issued a letter directing Paxton’s office to preserve all evidence related to the investigation. That letter told Paxton the committee “has been conducting an investigation related to your request for $3.3 million of public money to pay a settlement resolving litigation between your agency and terminated whistleblowers.”

In February, Paxton reached a $3.3 million settlement with four former deputies who claimed they had been fired in retaliation for reporting Paxton’s alleged misconduct to federal investigators. Lawmakers in both chambers have balked at authorizing taxpayer dollars to pay for it, and Phelan has said he personally opposes it.

A draft of the state budget that lawmakers have to pass in the coming days prohibits state funds from going toward the settlement.

Paxton’s office did not immediately respond to a request for comment on the news of the investigation. But about two hours before General Investigating Committee Chair Andrew S. Murr’s announcement of the subpoenas, Paxton took to Twitter to abruptly call for Phelan’s resignation, accusing him of presiding over his chamber “in a state of apparent debilitating intoxication.” Paxton also asked the House General Investigating to probe Phelan's conduct.

Over the weekend, a video clip went viral that showed Phelan slurring his words while overseeing House floor proceedings Friday night. Phelan’s office has repeatedly declined to comment on what took place.

“After much consideration, it is with profound disappointment that I call on Speaker Dade Phelan to resign at the end of this legislation session,” Paxton said in a statement, posted on Twitter, that said Phelan was “in a state of apparent debilitating intoxication.”

“His conduct has negatively impacted the legislative process and constitutes a failure to live up to his duty to the public,” Paxton wrote.

The 44-second video clip of Phelan began circulating on social media over the weekend. It was pushed by Phelan’s intraparty critics, including former state Rep. Jonathan Stickland, R-Bedford. It was also the subject of anonymous text messages deriding Phelan as “Drunk Dade.”

Phelan’s defenders noted he seemed to speak normally before and after the clip. They also noted that the people pushing the video, like Stickland, may be out for revenge after the House voted to expel one of their political allies, ex-state Rep. Bryan Slaton, R-Royse City.

The House ousted Slaton after an investigation by the House Committee on General Investigating found he engaged in sexual misconduct with a 19-year-old aide.

Paxton has battled his own ethical problems for years. Months after taking office in 2015, he was indicted for securities fraud linked to private business deals in 2011. He has denied any wrongdoing.

In fall 2020, eight high-ranking officials in the attorney general's office accused Paxton of improperly using his position to benefit his friend, real estate investor Nate Paul, who had donated $25,000 to Paxton's campaign in 2018. All eight of those employees were fired or left the attorney general's office soon afterward, and four of them — David Maxwell, Blake Brickman, Mark Penley and Ryan Vassar — sued Paxton under the Texas Whistleblower Act in November 2020.

In their lawsuit, the four former officials alleged that Paxton did political favors for Paul, including helping the Austin businessman gain access to investigative documents related to 2019 searches of Paul's home and businesses by state and federal authorities. They also claimed that Paxton rushed through a written opinion that said foreclosure sales had to be suspended under pandemic safety rules, allowing Paul to delay a foreclosure sale for one of his properties two days later.

In return, Paul had helped Paxton remodel his home and had given a job to a woman with whom Paxton was allegedly in a relationship. Paxton is married to state Sen. Angela Paxton, R-McKinney.

The Legislature’s refusal to fund the settlement throws the fate of the whistleblower case up in the air. In February, lawyers for the fired employees asked the Texas Supreme Court to pause its consideration of the case after the two sides worked out a potential $3.3 million agreement that would end the lawsuit but was subject to legislative approval. When it became clear in March that neither legislative chamber supported using public dollars to settle the lawsuit, the lawyers asked the court to resume the case. The Supreme Court has not yet ruled.

Without the settlement, the employees’ lawyers argue, their clients would be subjected to a drawn-out legal battle with an undetermined resolution when they could have received compensation for what they say was an unfair termination of employment.

Importantly, the lawyers argue, their clients have already relayed their knowledge of alleged crimes to state and federal authorities. The FBI began investigating Paxton in 2020 after the employees’ allegations were made public. In February, that investigation was taken over by U.S. Department of Justice investigators in Washington, D.C.

Paxton also faces a 2022 lawsuit from the State Bar of Texas’ Commission on Lawyer Discipline accusing him of engaging in professional misconduct by making dishonest claims when he asked the U.S. Supreme Court to overturn Democrat Joe Biden’s 2020 election victories in four swing states. Paxton’s bid to dismiss the lawsuit is before the Dallas-based 5th Court of Appeals.

In his statement calling for Phelan’s resignation, Paxton also criticized the House for failing to “pass critical conservative priorities including protecting the integrity of our elections and preventing Chinese spies from controlling Texas land.” The regular legislative session is winding down — the last day is Monday — and those were among the proposals that fell victim to a bill-killing deadline Saturday in the House.

Paxton shares political ties with Slaton, the ousted lawmaker. A top campaign contributor to both has been Defend Texas Liberty PAC, the Stickland-run group that is mostly financed by conservative megadonors Tim Dunn and the Wilks family.

As for the House investigation into Paxton, Wittman, the Phelan spokesperson, said “committee minutes and official House records indicate the committee has been investigating ‘Matter A’ since March.” The committee does not publicly comment on pending investigations, meaning it had been secret what Matter A was about.

Since April 14, the committee has issued 13 subpoenas in Matter A. Six were to John Does and seven were to unnamed entities.

Zach Despart contributed reporting.

Disclosure: The State Bar of Texas has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

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