Texas Attorney General, Already Facing Criminal Charges, Accused Of Civil Fraud

April 11, 2016

The U.S. Securities and Exchange Commission has charged Texas Attorney General Ken Paxton with securities fraud for allegedly improperly recruiting investors for a high-tech Texas startup.

NPR’s Wade Goodwyn reports for our Newscast unit that the federal civil lawsuit accuses Paxton — then a member of the Texas House of Representatives — of defrauding investors when he promoted the tech startup Servergy Inc., without disclosing that he was being paid to do so. Wade says:

“Paxton helped raise more than $800,000 for the company and was paid in the form of 100,000 shares of the new company. He is accused of not disclosing the commission arrangement with investors.

“The federal lawsuit mirrors state charges filed last year. Paxton was indicted on two first-degree felony counts and a third-degree felony for acting as an investment adviser without being registered.”

The civil charges spell more legal trouble for the Republican, who was already criminally indicted in the case. As we reported, Paxton turned himself in to authorities last summer and then immediately posted bail. He can legally remain in office while under indictment.

The firm in question was also charged, along with former company officials William Mapp and Caleb White. The Houston Chronicle reports that “Servergy and White already have settled their cases by paying a combined $260,000 in penalties, according to the SEC.”

A lawyer for Paxton, however, says the attorney general will not be settling.

“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,” Bill Mateja said, according to The Associated Press.

Copyright 2016 NPR. To see more, visit http://www.npr.org/.

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