Texas Attorney General Ken Paxton to settle with four whistleblowers for $3.3 million

Texas Attorney General Ken Paxton has agreed to pay four agency whistleblowers a $3.3 million settlement and will apologize for referring to them as "rogue employees," according to a tentative settlement agreement filed with the state Supreme Court on Friday.

Taxpayer money will likely be used to pay the settlement because the suit was against the Office of the Attorney General. According to a "mediated settlement agreement" obtained by the American-Statesman, the deal is contingent on "necessary approvals for funding." It is possible the Legislature might have to approve a funding request for the settlement.

The settlement would bring to closure a tumultuous chapter for Paxton and the agency that generated national headlines. It began in 2020 when his top lieutenants went to the FBI to allege a series of potential crimes by their boss involving a wealthy Austin donor. Paxton has said that they were disgruntled employees and that some were facing internal disciplinary action at the time, and he weathered the issue last year, getting elected to a third term.

Paxton said in a statement: "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. This settlement achieves these goals. I look forward to serving the people of Texas for the next four years free from this unfortunate sideshow."

According to the obtained document, a portion of the settlement will be structured as back pay to whistleblower Ryan Vassar, who will receive 27 months' service credit toward the state retirement plan.

The settlement also will require Paxton to formally apologize, according to the document. The settlement agreement will include: "WHEREAS, Attorney General Ken Paxton accepts that plaintiffs acted in a manner that they thought was right and apologizes for referring to them as 'rogue employees.'"

Additionally, Paxton's office must remove from its website a written response Paxton issued about the allegations. By Friday afternoon, that webpage had been deleted.

The executives, appointed to their former positions by Paxton, were among eight who resigned or were fired in October 2020. The group suspected Paxton had misused the powers of his office to help Austin donor Nate Paul and reported this to the FBI in 2020, triggering a federal probe.

Related:AG Ken Paxton downplayed accusations of impropriety, whistleblowers allege

The former executives alleged in 2020 that Paxton used his office to help Paul in exchange for benefits including remodeling Paxton's Austin's home, employing Paxton's mistress and giving a $25,000 political donation.

Paxton also overrode a decision by his agency's Charitable Trust Division and directed his office to intervene in a Mitte Foundation lawsuit against Paul, the whistleblowers alleged.

The whistleblowers also accused Paxton of helping Paul gain access to investigative documents related to FBI searches of Paul's homes and businesses.

Despite the apology, Paxton will not admit to any wrongdoing, according to the document.

Adrian Shelley, the Texas office director at the consumer advocacy nonprofit Public Citizen, said the use of taxpayer funds to pay the settlement is "entirely contrary to the public interest."

"There's absolutely no reason that the legal troubles of an individual related to their own personal conduct should be handled with taxpayer funds in any way," Shelley said.

State Rep. Jeff Leach, a Plano Republican who chairs the House Jurisprudence and Civil Affairs Committee, said he has concerns with using public money to settle the complaint against Paxton.

"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.

The FBI has never publicly acknowledged an investigation of Paxton. This year, court documents hinted that a settlement was possibly in the works.

Texas Solicitor General Judd E. Stone II requested in January that the state Supreme Court defer its review of the lawsuit pending the outcome of ongoing settlement negotiations. Stone wrote that three of the former executives "are actively engaged in settlement discussions."

"The whistleblowers acted bravely in the interest of all Texans," said Tom Nesbitt, an attorney for whistleblower Blake Brickman's attorney, in a statement. "This settlement speaks for itself."

Paxton has remained popular in the Texas GOP despite the controversy. He resoundingly defeated former Texas Land Commissioner George P. Bush in a closely watched race in November to become attorney general.

Paxton faces state securities fraud charges prosecutors since 2015, but he has said he is innocent.

John C. Moritz at the Corpus Christi Caller-Times and Katie Hall at the Austin American-Statesman contributed to this article.

This article originally appeared on Austin American-Statesman: Texas AG Ken Paxton to settle with four whistleblowers for $3.3M