Prosecutor: AG indicted for securities fraud

AUSTIN, Texas (AP) — A grand jury has indicted Texas Attorney General Ken Paxton on felony securities fraud charges that accuse the Republican of misleading investors before he took over as the state’s top law enforcement officer, according to a special prosecutor.

Kent Schaffer, a Houston defense attorney appointed by a judge to the case, told The New York Times that a Texas grand jury indicted Paxton on two counts of first-degree securities fraud and a lesser
charge of not registering.

The most serious allegation is that he encouraged investment in McKinney-based tech startup company Servergy Inc., which is now under investigation by the Securities and Exchange Commission. The Associated Press reported Paxton’s involvement with the company — and that a federal investigation was under way — last month.

Paxton also was fined last year for not disclosing to Texas securities regulators that he was getting commissions for soliciting investors.

Schaffer told The New York Times that the allegations regarding Servergy are first-degree securities fraud. He said Paxton is accused of encouraging investors in 2011 to put more than $600,000 into Servergy, while not telling them he was making a commission on their investment and misrepresenting himself as an investor.