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Politics

Ken Paxton’s Attorney: Texas AG “Vehemently Denies” SEC Fraud Charges

The federal civil charges compound Paxton’s legal troubles stemming from his work recruiting investors for technology firm Servergy Inc.

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portrait of Texas Attorney General Ken Paxton
Texas Attorney General Ken Paxton

The Securities and Exchange Commission on Monday filed civil fraud charges against Texas Attorney General Ken Paxton. The charges stem from Paxton's position on the board of directors of a high-tech startup while he was serving as a state legislator.

The SEC charges that, in 2011, Paxton reached an agreement with Servergy Inc.'s then-CEO William E. Mapp III to promote the company to prospective investors. Paxton raised $840,000 in investor funds in return for 100,000 shares of stock. According to the complaint, Paxton never disclosed his commissions to prospective investors while recruiting them.

"I think there are two principal possibilities here," says Bruce McGovern, vice president and associate dean at South Texas College of Law. "One is that Mr. Paxton, if found to actually [have] committed the asserted acts, will have to pay back amounts that he received and possibly some penalties as well, and the second major possibility here is of damage to his reputation, given the nature of the charges involved."

Paxton is already under felony state charges related to his dealings with Servergy.

"As with that criminal matter, Mr. Paxton vehemently denies the allegations in the civil lawsuit and he looks forward not only to all of the facts coming out, but also to establishing his innocence in both the civil and criminal matters," says Paxton's attorney Bill Mateja of the Polsinelli firm.

Paxton has pleaded not guilty to the criminal charges. You can read more on the SEC charges below.