Attorney General Ken Paxton’s office is under scrutiny after agency employees reallocated taxpayer-funded hotel rooms to donors and other private citizens, some of whom failed to cover the cost of the stay until the state comptroller began auditing the agency’s finances earlier this year.

Two senior officials involved in the incident resigned soon after it was brought to agency leadership’s attention.

Paxton, who is in a contentious runoff for the GOP Senate nomination against incumbent Sen. John Cornyn, was impeached in 2023 over allegations that involved improper relationships with a donor.

The more recent investigation centers on hotel rooms the agency booked for employees attending last year’s inauguration of President Donald Trump and Supreme Court arguments over a new state law, defended by Paxton’s office, that requires adult websites to verify users’ ages.

The agency paid more than $20,000 for a nonrefundable block of 10 hotel rooms at the Courtyard Marriott. Then, a winter storm prevented several of the travelers from getting to Washington.

The agency would have been on the hook for approximately $16,000 of unused hotel rooms, documents obtained through an open records request show. Instead, agency employees identified private citizens who wanted the rooms and agreed to pay out of pocket for them.

“The intent was to relieve the OAG of its financial obligation for the unused rooms,” deputy first assistant attorney general Ralph Molina said in an investigative report conducted by the agency.

The people who agreed to take the rooms included major Paxton donors Terry and Jennifer Lacore, controversial Albanian businessman Bashkim Ulaj and chair of the Albanian Republican Party Fatmir Mediu. Keith Craft, lead pastor at Elevate Life Church in Frisco, later took one of the rooms as well. The list was first reported by Texas Bullpen.

State Sen. Angela Paxton, a Republican from McKinney who filed for divorce from Ken Paxton six months later, also took one of the rooms at her own expense. Sen. Paxton authored the bill that was argued, and ultimately upheld, at the Supreme Court.

The state employees did not go through the proper process to transfer these rooms, according to the agency’s internal report. And when two of the private citizens who were supposed to take over the rooms did not end up using them, they were ultimately billed to the OAG — with the names of the two private citizens, one of whom previously donated to Paxton, attached to the charge.

“The employees responsible for effectuating this apparently did not inform their superiors about this billing problem,” Molina wrote. “Instead, they requested the private individuals pay the hotel for their rooms after the fact, despite their ultimate absence from the hotel, which would in turn allow the hotel to issue an offsetting refund to the OAG.”

These private citizen bookings saved the agency $7,296, although it still paid $8,339 for the unused, nonrefundable rooms.

In June, officials from the state comptroller’s office notified the attorney general’s office they were opening a “routine post-payment audit” to review payroll, purchasing and travel expenditures. A few weeks later, Craft and another guest paid the hotel for the cost of the room; the hotel then reimbursed Paxton’s office.

That audit was paused after Comptroller Glenn Hegar left office and was replaced by acting Comptroller Kelly Hancock.

In October, two of Paxton’s senior aides, chief financial officer Michele Price and chief of staff Lesley French, began emailing about the travel discrepancies. The conversation, and the emails, subsided, until days after the March 3 primary election — when Hancock reopened the audit.

Soon after, French alerted fellow senior officials of what Molina described as “errors and mistakes” in hotel bookings that “could potentially be misconstrued in an audit.”

The next day, she resigned. A few days later, Price resigned as well.

Neither said anything in their resignation letters about the investigation or the audit. French said she had accepted another position. Price did not provide a reason for her resignation.

The Office of the Attorney General did not respond to a request for comment about the investigation and the departures of French and Price.

This article first appeared on The Texas Tribune.

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