Republican Texas Attorney General Ken Paxton , who was indicted last year on state securities fraud charges, now has additional legal troubles because the Securities ane Exchange Commission has charged accused him with misleading investors in a technology company.
The cases generate from investment work Paxton did before he was elected attorney general in 2014 while he was a member of the Texas House of Representatives.
Paxton says he did nothing wrong even though he arrested last year on felony charges. A grand jury in Collin County near Dallas charged him with two counts of securities fraud and one count of acting as an investment adviser representative without being registered with the state.
That case related to his promotion of and generation of investors for a technology company, Servergy Inc. Federal officials accused Mr. Paxton of encouraging and pressuring investors to invest in Servergy while failing to disclose that he was being compensated by the company. The investors included several of Paxton’s friends and a fellow lawmaker.
Court documents filed by the S.E.C. claim that Mr. Paxton raised $840,000 from the investors and received 100,000 shares of stock in return, but never disclosed his commissions. Mr. Paxton told investigators that he accepted the shares as a gift from the company’s founder, but the S.E.C. claimed that the stock was actually a sales commission he failed to disclose.
A former Servergy director, Caleb White, was accused of raising more than $1.4 million for Servergy and receiving $66,000 and 20,000 shares while never disclosing them.
Paxton was one of four defendants named in the lawsuit.
Jeffrey Newman represents whistleblowers.