NO STATE OF TEXAS IN THE DISTRICT COURT WARREN KENNETH PAXTON, JR. COLLIN COUNTY, TEXAS

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1 NO STATE OF TEXAS IN THE DISTRICT COURT V. 416 th JUDICIAL DISTRICT WARREN KENNETH PAXTON, JR. COLLIN COUNTY, TEXAS MOTION TO QUASH INDICTMENT FOR FAILURE TO COMMENCE PROSECUTION WITHIN THE STATUTE OF LIMITATIONS TO THE HONORABLE JUDGE GEORGE GALLAGHER: Warren Kenneth Paxton, Jr. ( Paxton ), requests this Court quash Indictment No for failure to commence prosecution within the Statute of Limitations and in support: I. PROCEDURAL HISTORY AND INTRODUCTION Criminal action commenced when Paxton was first charged by indictment true-billed by grand jury of the 416th District Court of Collin County, Texas, on or about July 7, 2015, alleging a violation of TEX. REV. CIV. STAT. ANN. Art (I) for conduct that occurred on July 18, 2012 ( Indictment, attached as Exhibit A ). No previous indictment existed against Paxton. The conduct of which Paxton is accused occurred more than three years prior than either the Indictment or occurrence date and accordingly is barred by the applicable statute of limitations. Limitations 1 1

2 II. ARGUMENT AND AUTHORITIES Paxton believes that there is no dispute as to the material facts in this Motion. Rather the issue is pure a legal question for the Court to decide. The Indictment was not presented until more than three years after the conduct of which he is accused and must be dismissed. A. The Allegations Against Paxton Indictment states that Paxton did... on or about the 18 th day of July render services as an investment adviser representative to James and Freddie Henry... and.... Paxton was then and there not duly registered as an investment adviser representative by and with the Securities Commissioner of the State of Texas. Exhibit A. B. The Operative Act Alleged Against Paxton Undisputedly Occurred on June 26, 2012 According to a document produced by the attorneys pro tem, on June 26, 2012, the Henrys gave written authorization for Paxton and Frederick Mowery to discuss any and all business related matters including business and personal accounts at Mowery Capital Management ( MCM ) and information required from Ken Paxton. See Exhibit B. This letter makes clear that any solicitation by Paxton of the Henrys for Mowery had occurred on or before June 26, 2012 more than three years before the July 7, 2015, true-bill. Limitations 2 2

3 The Henrys met and signed contracts with Mowery on July 18, The July 18 meeting and contractual formality were consequences of the alleged June 26, 2012, solicitation, separated from it and cannot compromise a violation of the Texas Securities Act (the Act ). The Act does not require that a solicitation be a success and is complete on the attempted date. C. The Act of Solicitation is the Operative Act The only event that occurred on July 18, 2012, is the Henrys signing their contract with Mowery. This date is irrelevant for statute of limitations purposes because the Act s definition of financial adviser representative ignores the question of whether Henrys actually hire Mowery. Instead the definition focuses on he who, for compensation, is employed, appointed, or authorized by an investment adviser to solicit clients for the investment adviser TEX. REV. CIV. STAT. ANN. Art (P)(emphasis added). The statute is silent as to the formula, manner or timing of compensation or whether it even has to actually be paid. 1 It is the act of rendering services, (assuming for the sake of argument that a solicitation may constitute a service ) while not registered that is the crime. Any service rendered after June 25, 2012, was rendered by Mowery, not Paxton. 1 Tying the offense date to the payment of compensation would be inappropriate as any solicitor paid in advance would be guilty before an actual solicitation occurred. Had the legislature meant the later of it would have said so. Limitations 3 3

4 The existence of an agreement to be compensated necessarily pre-dates an illegal solicitation. It is undisputed that Paxton and Mowery had such an agreement in place for years having signed written agreements on January 1, 2010, and July 28, 2006, both of which have been produced by the attorneys pro tem to Paxton. There would not have been even a July 18, 2012, meeting to sign the MCM contract absent a prior June 26, 2012, solicitation of the Henrys which Paxton and Mowery had years earlier agreed Paxton would be compensated. An offense date of July 18, 2012, is not the date for calculating the Statute of Limitations date. June 26, 2012, is the correct date. Any act of rendering services as a financial investment adviser representative was complete at the time of the solicitation on June 26, 2012, and thus any indictment alleging a violation of the relevant section of the Texas Securities Act must have been presented no later than June 25, 2015, which it was not. D. The Statute of Limitations is Three Years The statute of limitations for this Indictment is three years. The Act only addresses the statute of limitations for violations of 29(C), not 29(I). See TEX. REV. CIV. STAT. ANN Similarly, there is no specific statute of limitations for violations of the Act in the Texas Code of Criminal Procedure. See TEX. CODE CRIM. PRO. ART (1)-(6). This particular violation is a third Limitations 4 4

5 degree felony. TEX. REV. CIV. STAT. ANN. Art (I). As a result, this primary offense (not an attempt, conspiracy, etc.) falls within the general three year statute of limitations for felonies. TEX. CODE CRIM. PRO. ART (7). Felony indictments may be presented within these limits, and not afterward. Id. The government failed to present this Indictment against Paxton within those limits. An indictment is considered presented when it has been duly acted upon by the grand jury and received by the court. TEX. CODE CRIM. PRO. ART According to the various marks on the face of the Indictment, it was presented as early as July 7, 2015, or as late as July 28, 2015, more than three years after the alleged acts. 2 It is thus barred by the Statute of Limitations and should be dismissed. E. Paxton May Assert Statute of Limitations Defense Pre-trial A defendant may assert a statute of limitations defense by filing a motion to dismiss pre-trial by filing a motion to dismiss under Article 27.08(2) of the Texas Code of Criminal Procedure. Proctor v. State, 967 S.W.2d 840, 844 (Tex.Crim.App. 1998). Texas courts construe limitations provisions strictly against the State and liberally in favor of the defendant. Gallardo v. State, 768 S.W.2d 875, 880 (Tex.App. San Antonio 1989, pet. ref d). As demonstrated 2 The case number was not assigned until July 28, 2015, when two subsequent indictments were true billed against Paxton and all were given sequential case numbers in the range of other indictments presented on that day. Limitations 5 5

6 above, the correct date of any offense by Paxton can only be construed to have occurred on June 26, 2012, the actual date of the alleged solicitation. The Indictment was not brought within three years of that date, and should be dismissed with prejudice. III. CONCLUSION Paxton respectfully requests that this Motion to Quash Indictment for Failure to Commence Prosecution within the Statute of Limitations be Granted and the Indictment against him be dismissed with prejudice. Respectfully submitted, HILDER & ASSOCIATES, P.C. /s/ Philip H. Hilder Dan Cogdell Philip H. Hilder CO-LEAD COUNSEL CO-LEAD COUNSEL Cogdell Law Firm, PLLC State Bar No Main Street, 4 th Floor Q. Tate Williams Houston, Texas State Bar No Telephone: (713) Lovett Blvd. Facsimile: (713) Houston, Texas dan@cogdell-law.com Telephone: (713) Facsimile: (713) philip@hilderlaw.com tate@hilderlaw.com Terri Moore Bill Mateja 300 Burnett St., Ste. 160 Fish & Richardson, P.C. Fort Worth, TX Main Street, Suite 5000 Telephone: (817) Dallas, Texas moore@terrimoorelaw.com Telephone: (214) mateja@fr.com Limitations 6 6

7 Heather J. Barbieri Barbieri Law Firm, P.C Gables Court Plano, Texas Telephone: (972) Facsimile: (972) J. Mitchell Little Scheef & Stone, LLP 2600 Network Boulevard, Suite 400 Frisco, Texas Telephone: (214) Facsimile: (214) OF COUNSEL ATTORNEYS FOR DEFENDANT, WARREN KENNETH PAXTON, JR. CERTIFICATE OF SERVICE I hereby certify that on the 2nd day of November 2015, a true and correct copy of the above and foregoing Motion was served on all counsel of record via ECF, certified mail, return receipt requested, , electronically, or hand delivery. /s/ Philip H. Hilder Philip H. Hilder Limitations 7 7

8 CERTIFICATE OF CONFERENCE The Motion to Quash the Indictment is of a nature that a conference to resolve differences would not be productive. Therefore, this Court should treat the Motion as opposed. /s/ Philip H. Hilder Philip H. Hilder Limitations 8 8