Special prosecutors will ask a Texas grand jury as early as this month to indict the state's attorney general on first-degree felony charges for suspected securities laws violations, one of the prosecutors said on Thursday.
A spokesman for Attorney General Ken Paxton, a Republican who came to office earlier this year with strong Tea Party support, was not immediately available for comment.
"There is evidence that needs to be presented to the grand jury about a couple of different violations. One of which that they will have to determine is if securities fraud was present," said attorney Kent Schaffer, appointed to investigate the suspected violations.
Paxton drew national attention recently when he said county clerks in Texas who object to gay marriage on religious grounds can refuse to issue marriage licenses to same-sex couples despite last week's landmark U.S. Supreme Court ruling requiring states to allow same-sex marriage.
When Paxton was in the legislature, he was hired to seek clients by an investment firm called Mowery Capital Management, which is facing allegations from the State Securities Board of defrauding investors.
The Texas State Securities Board in May 2014 found that Paxton was not properly registered as an investment advisor in his work with the firm. It reprimanded him and fined him $1,000.
The special prosecutors, appointed earlier this year, have been looking into possible criminal violations stemming from Paxton's role with the firm and his failure to properly register as an advisor.
A first-degree felony conviction in Texas can result in 5 to 99 years in prison.