Texas Attorney General, Ken Paxton had earlier admitted violations of state securities laws. He is now preparing to go before a grand jury this month. Paxton has also figured in a federal investigation of a Dallas-area technology company suspected of having defrauded investors.
Paxton owns at least 10,000 shares in Servergy Inc., a company based in his hometown of McKinney. The U.S. Securities and Exchange Commission began investigating Servergy in 2013 after receiving complaints, according to federal court records reviewed by The Associated Press. The records show that Paxton’s name was singled out as a search term to satisfy an SEC demand for documents, and Paxton’s law firm email address also was among a lengthy list of Servergy contacts searched as part of the SEC’s investigation.
Both the SEC and the public prosecutors refused to comment.
Paxton Attorney, Joe Kandall said ,
Grand Jury proceedings are meant to be a secret to protect the innocent people’s reputations. I think it is inappropriate to comment about anything at this time.
The attorney general’s spokesman called the prosecution a “political hit job,” a charge that one of the special prosecutors denied .
The cloud of a criminal investigation has shadowed Paxton while he has simultaneously emerged as a national Republican figure in barely six months on the job. A tea party star in Texas, Paxton recently advised county clerks that they could refuse to issue marriage licenses to same-sex couples on religious grounds, despite the U.S. Supreme Court ruling legalizing gay marriage.
Federal regulators said in court filings that they were investigating whether Servergy deceived investors by falsely claiming it was selling its data servers to big name companies such as the online retailer Amazon and the semiconductor giant Freescale. The company raised more than $26 million selling shares in 2013, the SEC said.
SEC investigators had sought records from the company for more than a year when finally, in December, the agency filed suit in federal court to force compliance with its demand for company documents.