Republican and Tea Party champion Attorney General of Texas Ken Paxton has a new legal headache. Yesterday, the Securities and Exchange Commission filed a civil lawsuit for fraud against Paxton and others to accompany the federal criminal charges he’s already been indicted on.
The charges stemmed from investments Paxton made when he was a member of the Texas House of Representatives. Paxton is accused of recruiting investors for a technology company called Servergy Inc. while failing to disclose that he was receiving compensation from them. In securities law, that’s a big no-no. Shamoil T. Shipchandler, the head of the SEC office in Fort Worth, Texas, explains that:
“People recruiting investors have a legal obligation to disclose any compensation they are receiving to promote a stock, and we allege that Paxton … concealed the compensation they were receiving for touting Servergy’s product.”
Oops.
Of course, Paxton denies any wrongdoing regarding any charges made in the civil suit, just as he did with the felony criminal charges. Those criminal charges include two first-degree felonies for securities fraud and a third-degree felony for failing to register with the state to sell securities. If convicted of all three, Paxton faces a maximum of 99 years in prison. If a federal civil court rules against him, he could face sanctions and massive fines.
This isn’t Paxton’s first tangle with the authorities regarding securities law. He was reprimanded in 2014 by the Texas State Securities Board for failing to register as a representative of an investment adviser. He paid a $1,000 fine but faced no criminal prosecution. Recently, Paxton was also the subject of a separate investigation over wrongdoing in a Texas real estate transaction, but a grand jury declined to take any action.
That’s a pretty colorful record for someone who is the state’s chief law enforcement officer. Texas Democrats are calling for Paxton to step down:
“Enough is enough. How many more investigations, criminal charges and lawsuits need to be filed before Republican Ken Paxton takes responsibility for his lawlessness and resigns?”
More than the two pending federal cases, apparently. He isn’t resigning any time soon, and plans to fight all charges, according to Paxton’s lawyer. While two other individuals connected to the company have already reached a settlement, Paxton has not. Both cases are likely to proceed to trials. Until then, Paxton remains in office.
Featured image via Facebook
