Texas Attorney General charged with securities scam by the SEC

Texas Attorney General Ken Paxton has been indicted by a Texas state grand Jury in 2014.

In a significant development, U.S. regulators have charged Texas Attorney General Ken Paxton on charges of defrauding investors in a stock scam revolving around Servergy Inc., a Texas based technological company.

The U.S. Securities and Exchange Commission has accused William Mapp, Servergy Inc’s former CEO of selling private stock and misleading investors about the energy efficiency of its product. It further accused Paxton of working for the said company by raising investor funds without having disclosed his commissions.

This comes in the wake of a ruling wherein a Texas state grand Jury had indicted Paxton on two charges of fraud related to selling of stocks and compensation from Servergy.

Now Paxton is also facing charges of having illegally acted as a securities agent for another firm run by his political ally. A spokesman for Paxton, a Tea Party Republican, has said the case was politically motivated.

“Like the criminal matter, Mr. Paxton vehemently denies the allegations in the civil lawsuit and looks forward to not only all of the facts coming out, but also to establishing his innocence in both the civil and criminal matters,” said William Mateja, Paxton’s lawyer.

On its part, Servergy has agreed to settle the SEC case with a penalty of $200,000 without having to admit or deny the SEC’s charges.

The case relates to communications made by the company when Mapp was at its helm, said a statement from Servergy. The company cooperated with the SEC under a new leadership. With its announcement made yesterday, it considers the matter closed.

“Mr. Mapp vehemently denies the SEC’s allegations and intends to vigorously defend himself,” said Jason Lewis, Mapp’s lawyer in Dallas.

The Texas attorney general’s office declined to comment.

Before he was removed from office, Paxton was hired to scout for clients for Mowery Capital Management, an investment firm based out of McKinney, Texas. In 2014, security regulators in Texas had fined Paxton $1,000 for failing to properly register as an investment adviser.

As for Mowery, security regulators from Texas have ordered it and its founder to pay a total of $90,000 in civil penalties for defrauding investors, as per a filing.

Since last year, Paxton has sued President Barack Obama at least eight times since he took office as the Attorney General of Texas. The reasons for doing so include Obama’s healthcare law to resettlement of Syrian refugees in Texas.

Now, the Texas Democratic Party has called for Paxton’s resignation. They were not alone, as per a poll made by the Texas Bipartisan Justice Committee, 62% of Republicans think he should resign.

 

 



Categories: Regulations & Legal, Uncategorized

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