God Gave Me Illegal Stock Shares At Dairy Queen Fair and Square, Claims Texas AG Accused Of Fraud

Texas Attorney General Ken Paxton, already facing intense scrutiny for securities fraud in one case, was just slapped by the U.S. Securities and Exchange Commission with three additional charges of fraud based on an alleged illegal kickback deal Paxton and a company had used to entice investors and enrich Paxton by hundred of thousands of dollars.

But let’s not bury the lede here: His defense for these pretty clearly illegal actions is bonkers.

Paxton is accused of raising nearly a million dollars from prospective investors for a company called Servergy Inc. and illegally keeping it a secret that he would be directly benefiting from these deals. After he persuaded some wealthy friends to put $840,000 into the company, he got 100,000 shares of stock in the company. To outsiders – and investigators at the SEC – this looked like a pretty clear example of quid pro quo securities fraud. It’s very illegal to raise funds for a company without disclosing that you are benefiting from said funds for obvious reasons.

Paxton, a Republican elected by 2014 under Governor Greg Abbott, claims what he did wasn’t what it looks like because he had always intended to pay for the shares until a miracle happened while innocently chowing down on some hot eats, cool treats at a Dairy Queen with the CEO of Servergy Inc., William Mapp. During the meeting, according to Paxton, Mapp apparently heard the voice of God telling him not to accept a penny for hundreds of thousands of dollars worth of shares. Instead, Mapp said they would be a gift to Paxton.

This apparently is the defense Paxton – an accomplished attorney – is going with.

The SEC said Paxton told investigators that the shares were a gift from Mapp, not necessarily a commission. According to the complaint, Paxton claimed he accepted the shares only after Mapp refused to accept an offer from Paxton to invest $100,000 of his own money in Servergy.

“I can’t take your money. God doesn’t want me to take your money,” Mapp told Paxton during a meeting at a Dairy Queen during the summer of 2011 in McKinney, according to the SEC.

It’s unclear if the “God wanted me to have a strong investment portfolio” defense has ever been attempted in a securities fraud case, but it seems unlikely many juries would be persuaded. And it will be a particularly steep uphill climb for Paxton in particular, who is already facing separate felony charges for similar crimes at the state level.

Texas’s state government has become a baffling menagerie of incompetence, corruption and scandal. Governor Greg Abbott, when not endorsing fringe theories about Obama invading the state, has allied himself with anti-pharmaceutical Scientologist groups who not only believe Texas shouldn’t money combating mental illness, but that mental illness doesn’t exist. Its previous governor, Rick Perry, recently barely escaped his own legal challenges after a lengthy court battle over his use of vetos while in office. The woman assigned to head the state’s Board of Education is a home schooler who doesn’t believe in science. Another woman running for the Board of Education accused President Obama of being a gay prostitute.

In any other state, saying a technology company CEO channeled God to make you rich would make you a laughingstock. In Texas, he’s just one of many.


Featured image via Drew Angerer/Getty Images