Special prosecutors in the securities fraud indictments of Ken Paxton obtained newly re-worded indictments against the sitting Texas attorney general.
The charges against the AG remain the same but the language within the securities fraud indictments differs. The prior securities fraud indictments have been dismissed.
“This confirms that there have been troubling issues with the grand jury process from the beginning. They had months to investigate and then rushed to indict,” said the attorney general’s attorney, Joe Kendall, in a written statement.
“Now, the special prosecutors are back to clean up the botched indictments,” the lawyer for Paxton said.
Breitbart Texas published an article entitled “Understanding the Charges Against Texas Attorney General Ken Paxton” the day after the release of the indictments. The article includes a copy of the original indictments.
The third charge, failing to register as a securities adviser is not the subject of a re-indictment. The circumstances surrounding this charge has been a very public political issue since the Republican primary race for attorney general in 2014. The issue was first raised by one of Paxton’s Republican primary opponents, Dan Branch. In May of 2014, the Texas State Securities Board fined then-Texas Senator Paxton $1,000 for failing to register.
The securities fraud counts come from Paxton’s association with a company called Servergy.
Servergy, a technology company located in McKinney, Texas, “has been in the crosshairs of the Securities and Exchange Commission (SEC) for more than a year,” according to WFAA8-ABC in Dallas. The media outlet reported that the SEC filed a lawsuit last year accusing founder Bill Mapp of “possibly fraudulent statements or omissions related to Servergy’s technology and purported business relationships.”
The two original indictments for securities fraud were identical and charged Paxton with violations of section 29(C) of the Texas Securities Act.
The complainants in the securities fraud cases are Joel Hochberg and Texas State Representative Byron Cook. Both charge Paxton with committing the crime on or about the 26th day of July, 2011.
The foreman of the grand jury signed the original indictments on July 28, 2015.
Paxton was charged as follows, “In connection with the sale, offering for sale or delivery of, the purchase, offer to purchase, invitation of offers to purchase, invitations of offers to sell, or dealing in any other manner in any security or securities, engaging in fraud or fraudulent practice in violation Texas Securities Act, Section 29(C).”
Specifically, the original indictments stated that the alleged fraud involved:
[T]he offer for sale and sale of common stock of Servergy, Inc., being a security to wit: stock, to [Joel Hochberg/Byron Cook], hereinafter styled the complainant, in an amount involving $100,000 or more, by intentionally failing to disclose to the complainant, to wit: that [Paxton] had not, in fact, personally invested in Servergy, Inc., and that [Paxton] would be compensated, and had, in fact, received compensation from Servergy, Inc., in the form of 100,000 shares of Servergy, Inc. stock, the said information being material fact.”
The re-indictment as it relates to complainant Bryon Cook has been placed below. The re-indictment as it relates to Joel Hochberg is exactly the same as Cook’s.
The indictments include the same factual allegations but add the mental state of “unlawfully and intentionally” as it relates to offering to sell, and selling to complainants, stock issued by Servergy, Inc., in the amount of $100,000 or more.
The re-indictments also delete that Paxton’s alleged actions are violations of section 29(C) of the Texas Securities Act.
In a statement obtained by Breitbart Texas, special prosecutors Brian Wice and Kent Schaffer wrote, “Contrary to the assertion of Mr. Paxton’s criminal defense lawyer that the indictments charging his client with two counts of first-degree felony securities fraud were ‘botched,’ we obtained re-indictments to defuse the boilerplate arguments predictably advanced by the defense that the original indictments lacked specificity or were otherwise ambiguous.”
The special prosecutors in the case continued, “It is not unusual in any felony case, particularly fraud cases, for prosecutors to ask the grand jury to re-indict so as to provide sufficient notice to the accused as to the nature of the criminal conduct with which he is charged. At the end of the day, the ‘fair-minded people’ whom Mr. Paxton’s criminal lawyer believes should ‘question the process in this case’ will recognize that the allegations against his client remain unchanged.”
Lana Shadwick is a contributing writer and legal analyst for Breitbart Texas. She has served as a prosecutor and associate judge in Texas. Follow her on Twitter @LanaShadwick2