SEC charges Texas attorney general for stock scam

Mon Apr 11, 2016 4:42pm EDT
 
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By Suzanne Barlyn

(Reuters) - U.S. regulators charged Texas Attorney General Ken Paxton on Monday for his alleged role in a stock scam that defrauded investors in a Texas-based technology company called Servergy Inc.

The U.S. Securities and Exchange Commission accused the company and former Chief Executive Officer William Mapp of selling private stock while misleading investors about the energy efficiency of its sole product, and accused Paxton of working to raise investor funds for the company without disclosing his commissions.

The SEC's civil case followed a related criminal case against Paxton for securities fraud. Last year, a Texas state grand jury indicted Paxton on two fraud charges related to stock sales and compensation from Servergy.

Paxton, a Tea Party Republican, is also facing charges he illegally acted as a securities agent for another firm run by a political ally. A spokesman for Paxton 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.

Servergy, which cut ties with Mapp, agreed to a $200,000 penalty to settle the SEC case. Servergy neither admitted nor denied the agency's charges.

The case relates to investor communications made while Mapp led Servergy, the company said. Servergy cooperated with the SEC investigation under new leadership and considered Monday’s announcement the end of the matter, it said.

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

 
Texas Attorney General Ken Paxton is shown in this booking photo provided by Collin County.gov, near Dallas, Texas August 3, 2015.  REUTERS/Collin County.gov/Handout via Reuters