Civil fraud charges against Ken Paxton refiled by SEC

Ken Paxton (KXAN Photo)
Ken Paxton (KXAN Photo)

AUSTIN (KXAN) — The Securities and Exchange Commission has refiled civil fraud charges against Texas Attorney General Ken Paxton on Friday.

The fraud charges were dismissed two weeks ago on Oct. 7 by District Judge Amos Mazzant, in a considerable victory for Paxton.

“This case is not about whether Paxton had a moral obligation to disclose his financial arrangement with Servergy to potential investors,” Judge Mazzant wrote at the time. “This case is also not about whether Paxton had some general obligation to disclose his financial arrangement to his investor group. The only issue before the Court is to determine whether the facts as pleaded give rise to a plausible claim under federal securities laws.”

The agency complaint says Paxton raised $840,000 in investor funds for Servergy, Inc., which gave him $100,000 shares of stock in return. The SEC said he never disclosed his commissions to the prospective investors.

He was indicted last year and later sued by the SEC, which began investigating Servergy in 2013. The case is unrelated to the criminal fraud charges that Paxton is fighting in state court. On Oct. 12, the Texas Court of Criminal Appeals refused to consider dismissing the felony indictments out of Collin County. Paxton has pleaded not guilty to the criminal charges and won’t stand trial until 2017 at the earliest.

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