Servergy, Inc. – the company at the center of Attorney General Ken Paxton’s legal woes – has been sued by a group of Alabama investors who claim they were defrauded into purchasing shares of the company. The suit alleges that Servergy made numerous misrepresentations about its business to entice new investors to buy into the company. The investors claim that Servergy made unsupported claims about the sales of its signature product – a small server – and represented that IBM and other giants were poised to buy the company. Paxton himself brought investors to the table without revealing that he was getting a commission. Tea Party favorite Paxton never bought into the company but did receive 100,000 shares as a gift that he somehow forgot to put on his tax returns and his required disclosures with the Texas Ethics Commission.
Texas Attorney General and Tea Party Hero Ken Paxton faces additional legal troubles. Numerous outlets are reporting that the Securities and Exchange Commission has charged Paxton with misleading investors in a technology company. The SEC filed the charges Monday in federal court in Sherman. The allegations are similar to those Paxton faces in a indictment in Collin County.
Paxton is named in the SEC’s complaint along with William Mapp who founded Servergy Inc. The SEC claims that Paxton raised hundreds of thousands of dollars for Servergy without disclosing that he was earning a commission. According to the SEC complaint, Paxton persuaded five investors to put $840,000 into Servergy. One month later, Paxton received 100,000 shares of stock in the company. Paxton’s story is that the shares were a gift from Mapp and not a commission.
And this is the chief legal official of our great state.