Texas AG 'gratified' as fraud lawsuit against him collapses


AUSTIN, Texas – Texas Attorney General Ken Paxton said he is “gratified” that a federal judge dismissed civil charges alleging that he duped people into investing into a tech startup, as he continues to fight criminal charges pertaining to the matter in state court.

U.S. District Judge Amos Mazzant ruled Friday that the Securities and Exchange Commission didn’t offer enough evidence that Paxton intentionally misled people he advised to invest in a tech startup, Servergy Inc., and that Paxton wasn’t legally obligated to tell them that the company was paying him to recruit investors for it. Mazzant gave the SEC two weeks to refile its case.

Paxton, a Republican, is still charged in state court with two felony counts of securities fraud, which carries a potential sentence of 5 to 99 years in prison. He has pleaded not guilty and is hoping Texas’ highest criminal court will dismiss those charges, after two lower courts declined to do so.

“Now we turn our attention to Ken’s exoneration in the state matter where the prosecutor’s burden is even higher,” Paxton attorney Bill Mateja said.

Securities regulators accused Paxton of raising $840,000 in 2011, when he was a state lawmaker, by using high-pressure tactics on investors. Special prosecutor Brian Wice said the dismissal of the civil case would have no “meaningful effect” on the criminal case.


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