Thanks to Tea Party AG Paxton, Even the Fraud is Bigger in Texas

RSS Feed

Thanks to Tea Party AG Paxton, Even the Fraud is Bigger in Texas

April 11th, 2016

Awake Goy

Susanne.Posel-Headline.News.Official- ken.paxton.fruad.sec.severgy_occupycorporatism Susanne Posel ,Chief Editor Occupy Corporatism | Media Spokesperson, HEALTH MAX Brands

The U.S. Securities and Exchange Commission (SEC) has filed a civil fraud suit against Texas Attorney General Ken Paxton and former executives of Severgy Inc. for recruiting investors to give to a tech start-up prior to becoming the attorney general.

Even though Paxton is currently under investigation for felony charges that he defrauded wealthy investors using Severgy Inc in 2011, he refuses to resign and has pleaded not guilty to the SEC’s allegations.

In the complaint, Paxton, a former member of the board of directors, allegedly assisted in raising $840,000 in capital for Severgy Inc while being paid with 100,000 shares of common stock in the company.

In the SEC statement , the agency said: “Servergy Inc. and William E. Mapp III sold $26 million worth of company stock in private offerings while misleading investors to believe that the Cleantech CTS-1000 server (the company’s sole product) was especially energy-efficient. They said it could replace “power-hungry” servers found in top data centers and compete directly with top server makers like IBM, Dell, and Hewlett Packard. However, neither Mapp nor Servergy informed investors that those companies were manufacturing high-performance servers with 64-bit processors while the CTS-1000 had a less powerful 32-bit processor that was being phased out of the industry and could not in reality compete against those companies.”

Because Severgy was “low on operating funds” investors were “falsely” told that the company was doing more business then it actual was. To entice investors, Mapp “specifically mentioned an order purportedly received from Amazon.”

The SEC claims Paxton did not disclose his compensation to investors. The lawsuit states: “At no time did Paxton disclose his compensation agreement with Servergy to prospective investors, despite an obligation to do so.”

Shamoil Shipchandler, director of the Fort Worth regional office for the SEC, said : “People recruiting investors have a legal obligation to disclose any compensation they are receiving to promote a stock, and we allege that Paxton and White concealed the compensation they were receiving for touting Servergy’s product.”