SEC files charges naming Paxton in Servergy case



Texas Attorney General Ken Paxton is facing civil fraud charges filed by the U.S. Securities and Exchange Commission.

Paxton was named in charges filed April 11 against Servergy Inc., a McKinney-based technology company incorporated in Nevada, and its founder and former chief executive officer William E. Mapp III.

The federal regulatory agency’s 26-page complaint contains the charges alleging “the boosting of stock sales with false claims about a supposedly revolutionary computer server and big-name customers purportedly placing orders to buy it” from November 2009 through September 2013, a period during which Servergy raised some $26 million in private securities.

Paxton, a former member of the company’s board of directors, is also named as a defendant in the complaint. The SEC alleges that Paxton, while serving as a member of the Texas Legislature in 2011:

– Reached an agreement with Mapp to promote Servergy to prospective investors in return for shares of Servergy stock; and

– Raised $840,000 in investor funds for Servergy and received 100,000 shares of stock in return; and

– Failed to disclose his commissions to prospective investors while recruiting them.

The case, styled as SEC v. Mapp, et al., was filed in the U.S. District Court for the Eastern District of Texas, Sherman Division.

In its complaint, the SEC also notes that on July 28, 2015, a Collin County grand jury indicted Paxton on two counts of first-degree state securities fraud and one third-degree felony count for failing to register as an investment adviser representative for the same conduct underlying a disciplinary order by the Texas State Securities Board. That indictment is pending.

New leaders named

Texas Health and Human Services Executive Commissioner Chris Traylor on April 11 announced retired Texas Ranger Chief Henry “Hank” Whitman as his choice to be the next head of the state Department of Family and Protective Services.

Whitman has more than 34 years of law enforcement experience, including 22 years with the Texas Rangers. Joining Whitman will be Kristene Blackstone as assistant commissioner for Child Protective Services.

The new leadership team, Traylor said, will provide new direction, clear goals and high accountability to ensure the agency’s core mission remains keeping Texas children safe. The Child Protective Services division is challenged with managing caseload growth and in improving employee retention.

Sales tax holiday is set

Texas Comptroller Glenn Hegar on April 13 promoted the April 23-25 Emergency Preparation Supplies Sales Tax Holiday.

“The severe weather, fire and flooding we had last year provided a stark reminder that Texans should be prepared for any emergency,” Hegar said. “This tax holiday allows people to save money while ensuring they have the supplies they need if disaster strikes.”

During the three-day holiday, no tax will be charged on items such as:

– Batteries, fuel containers and flashlights priced at less than $75;

– Hurricane shutters and emergency ladders priced at less than $300; and

– Portable generators priced at less than $3,000.

Examples of purchases that do not qualify for the tax break include:

– Batteries for automobiles, boats and other motorized vehicles;

– Camping stoves and camping supplies; and

– Chainsaws.

Zone dangers recognized

The Texas Department of Transportation, in observing National Work Zone Awareness Week, April 11-15, urged drivers to slow down, pay attention and be extra cautious — especially when transiting highway work zones.

In 2015, 138 people died in 21,886 work zone crashes in Texas, an increase of 13 percent over the previous year, and the top two causes of those crashes were speeding and driver inattention, the agency stated.

“People often think work zone crashes result in the deaths of roadside workers, but last year, 81 percent of these fatalities were motorists. Work zones require complete attention and strict adherence to posted traffic signs. For the sake of everyone working in and traveling through work zones, we urge drivers to be extremely careful and responsible so everyone can arrive home safely to their loved ones,” said TxDOT Executive Director James Bass.

TxDOT noted that with the state’s population continuing to boom, “the price of progress can mean more than 2,500 active TxDOT work zones at any given time.” By law, drivers are required to move over or slow down when approaching work crews, emergency vehicles or tow trucks stopped on the roadside or shoulder with flashing blue or amber lights. Traffic fines in work zones double when workers are present and can cost up to $2,000.

ED STERLING is the Director of Members Services at Texas Press Association.

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