Ken Paxton, the Republican attorney general of Texas, was indicted by a grand jury on several felony charges of securities fraud and failing to register with the state securities board. Several local news outlets reported Saturday about the indictments, which were issued Tuesday and immediately sealed.
A grand jury in McKinney, Texas, issued the indictment on three counts, officials told the New York Times. The indictment will be unsealed at noon on Monday, WFAA-TV, Dallas, reported. At that time, Paxton will be able to turn himself in to be photographed, fingerprinted and booked.
The charges, which date to Paxton’s time in the Texas House of Representatives before he was elected attorney general in November, were disclosed to the New York Times Saturday by Kent Schaffer, one of the special prosecutors handling the case. Paxton is facing two counts of first-degree securities fraud while a third count accused him of not registering with the state securities board.
In the indictment, Paxton is alleged to have misled investors who backed a technology company called Servergy Inc., which is headquartered in McKinney. The New York Times reported Paxton urged investors to sink more than $600,000 into the company without disclosing he made a commission on their investments. He also misrepresented himself as an investor of the company. The Securities and Exchange Commission is investigating the charges.
Paxton had a similar arrangement with a financial planning firm, the Dallas Morning News reported in May. He had referred his private legal clients to Mowery Capital Management, a firm that was accused of engaging in “unethical and fraudulent conduct” by the state of Texas. Paxton didn’t tell his clients he was paid for the referrals, and paid a $1,000 fine for failing to register as an agent on behalf of Mowery in 2014.
If convicted, Paxton could face life in prison or a sentence of five to 99 years, the punishment for a first-degree felony in Texas. When he was a member of the Texas House of Representatives in 2003, Paxton voted to amend the state securities law to make it a felony to act as an investment adviser representative without being registered.