Texas chief law Infringement…er…law enforcement officer Attorney General Ken Paxton has been charged with fraud by U.S. Securities and Exchange Commission investigators.
This is related to the state criminal charges he faces in his home county. Naturally K-Pax, claimed he was being targeted for political retribution, but with GOP running the show statewide and in Collin County it’s quite a stretch.
Essentially he is charged with misleading investors without disclosing that he would financial benefit. Paxton helped raise $840,000 from investors and in return he received 100,000 shares in the company Servergy. According to the SEC, “Despite a duty to do so, Paxton knowingly or recklessly failed to inform any member of the investment group that he was being compensated by Servergy for recruiting investors.”
Paxton’s attorneys say, “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.” But at least one investor said they would not have invested had they known Paxton was being compensated.
Apparently, the investors trusted K-Pax enough not to do their own independent research on the claims of the company which turned out to be untrue according to the SEC. Servergy CEO William Mapp has also been charged. In presentations to potential investors he made false claims that Servergy had lined up large clients like Amazon and Freescale, and that the service was significantly better than the industry standard.
Perhaps the most entertaining part of the entire episode is that the exchange over compensation took place at Dairy Queen. The Texas Tribune reports that Mapp refused Paxton’s request to invest $100,000 of his own money telling him, “I can’t take your money. God doesn’t want me to take your money.”
God seems to have had much bigger plans for K-Fed…er…K-Pax.