Another Hiccup in the Ken Paxton Case
Ken Paxton, before everything got really complicated.
Photo from Texas Legislature
In the latest development in the trials and tribulations of Texas Attorney General Ken Paxton, it appears one of his business associates lied to investigators.
It turns out that the former-CEO of Servergy, the company at the heart of the case against Paxton, told investigators two different versions of what went down when Paxton was finding investors for the McKinney-based tech company. In April 2014, then-Servergy CEO Bill Mapp testified before the Securities and Exchange Commission that he had paid Paxton for consulting and for finding investors for Servergy. But then in July of this year the story changed and Mapp told the Texas Rangers that he did not pay Paxton, that he had offered Paxton a commission and that Paxton refused, according to recent filings in Paxton's criminal case.
Either way, Paxton ended up with $100,000 worth of shares in the company, which has already been reported. The important thing is that it appears Mapp lied to either the SEC or the Texas Rangers. In fact, Servergy is really at the center of Paxton's continuing tumble from political grace. The indictments for felony securities fraud against Paxton allege he persuaded fellow State Rep. Byron Cook and another guy to invest a whole bunch of money in Servergy without ever mentioning that he himself hadn't put a dime into the company and that he was being compensated by Servergy for doing so.
Mapp's status as an unreliable narrator on the subject of Paxton's compensation for his consulting and recruiting for Servergy came out in a court filing from two court-appointed prosecutors on the case, Brian Wice and Kent Schaffer. The court record is titled "Brady v. Maryland disclosure No. 1," referring to the U.S. Supreme Court case Brady v. Maryland that requires prosecutors reveal information that may help a defendant in a criminal case. Usually Brady disclosures are just handed over to the defense lawyers in the discovery process, but the prosecution went with this flashier method of a public court filing, sharing it where everyone would find out about it, as WFAA noted.
As we've previously reported, the Servergy angle of the Paxton case is really one of the most interesting parts of the whole story because this company stands of accused of some fairly dubious business tactics. The U.S. Securities and Exchange Commission is currently investigating the company and has accused Servergy of lying to investors by falsely claiming that huge companies, including Amazon and Freescale, had already bought its data servers. According to the SEC, Servergy lied to investors about the servers themselves, claiming the machines required 80 percent less cooling, energy and space than others on the market. While Paxton hasn’t been accused of any wrongdoing in the SEC probe, court records show the feds were looking for any Servergy documents bearing his name.
It's unclear right now what Mapp telling two different stories to investigators really means for the Paxton case. For one thing, the prosecutors making this disclosure under Brady v. Maryland was a very public way of telling Paxton's attorneys, "Hey, look, this CEO has lied to investigators in the not-to-recent past." If the prosecution was building any significant part of its case around Mapp, then this revelation could be a slight problem for them. However, this information really makes Paxton's ties to Mapp and Servergy look all the more troubling, since it underscores the fact that Paxton was in business with some (allegedly) shady characters, the kind that somehow think that SEC investigators and the Texas Rangers won't compare notes.