2004 fraud case causes sparks in GOP party leader's race

380771 03: The Republican Party's elephant symbol is seen on display October 24, 2000 at the Republican campaign headquarters in El Paso, Texas. (Photo by Joe Raedle/Newsmakers) 380771 03: The Republican Party's elephant symbol is seen on display October 24, 2000 at the Republican campaign headquarters in El Paso, Texas. (Photo by Joe Raedle/Newsmakers) Photo: Joe Raedle, Getty Images Photo: Joe Raedle, Getty Images Image 1 of / 1 Caption Close 2004 fraud case causes sparks in GOP party leader's race 1 / 1 Back to Gallery

AUSTIN -- A high-stakes internal fight in the Republican Party of Texas exploded into the open on Thursday as a Frisco candidate for party chair accused the current chairman of being unfit for reelection because he was charged with federal securities fraud 14 years ago.

Party insiders suggested the fight is really over who will control the party: Moderates or conservatives who have increasingly been at odds with each other in recent years over issues such as abortion, immigration, border security, school vouchers and the bathroom bill, among others.

In a speech to Lubbock Republicans, Cindy Crocker Asche said James Dickey, who became state GOP chairman a year ago, should get the boot at the party's state convention in June because of the charges filed against him in 2004 by the U.S. Securities and Exchange Commission.

The case alleged that Dickey and a partner fraudulently sold about $71.6 million worth of securities in a Texas-based hedge fund in 2000 and 2001, when both men were living in the Dallas area. Thirty investors were involved in the alleged scam, according to SEC filings.

Dickey was 37 at the time. His partner, then 36, was found guilty of fraud charges and fined after a jury trial, government records show.

"(Dickey) was charged by the federal Securities Exchange Commission with classic hedge fund fraud in violation of multiple federal statutes" and should not be trusted with the party's finance because of that history, Asche told the group.

An audio tape of her presentation was reviewed online by the Houston Chronicle.

Dickey, insisting he could not discuss the SEC case because of his settlement agreement, branded the accusations "a desperate effort by a losing candidate."

"It has nothing to do with the party," he told the Houston Chronicle.

Asche will face Dickey in an election to head the state party at the state Republican Party convention in June. In June 2017, he replaced Tom Mechler of Amarillo.

In her presentation, Asche estimated that investor losses in the case were $63 million -- including the prestigious Art Institute of Chicago, which lost a reported $39 million.

"Dickey refused to admit even undisputed facts. Instead, he invoked the Fifth Amendment so many times that the SEC requested the court grant an inference of guilt," Asche said.

Asche also said that Dickey agreed not do dispute the allegations in the original complaint and "consented to the final judgment, and a pay a penalty of $35,000."

SEC reports confirm that.

Asche said the state party faces tight finances, and insisted that "integrity is sadly lacking in our current leadership," she said, according to an online transcript of the presentation. "I personally feel (this record) disqualifies him from representing the (state party) with donors and investors."

She contended that Dickey's appointment occurred "because we didn't vet our candidates."

His election as state party chair by a 32-31 vote of the State Republican Executive Committee in June 2017 came after conservatives and tea-party activists lined up behind him.

Dickey had previously served as a precinct chair and then as Travis County GOP chair. He was defeated for re-election in the March 1, 2016 Republican primary by Robert Morrow, an eccentric gadfly known for wearing a jester hat before Dickey reclaimed the chairmanship.

Mike Ward, the Chronicle's Austin Bureau chief, covers Texas politics and the governor's office, along with criminal justice and ethics issues. Follow him on Twitter @ChronicleMike and send him story tips at Mike.Ward@Chron.com.