Ken Paxton told federal investigators a tech CEO gave him $100,000 worth of stock five years ago, but he never disclosed the shares as either a gift or income, an issue ethics experts agreed could spell more trouble for the attorney general already facing state and federal fraud charges.
According to federal fraud charges filed against Paxton last month, the embattled first-term Republican AG told investigators from the U.S. Securities and Exchange Commission that in 2011 he was given 100,000 shares of stock in the North Texas tech startup Servergy by the firm’s then-CEO Bill Mapp.
While Paxton said he intended to invest in the company and pay for the shares, Mapp allegedly wouldn’t accept, telling him during a meeting at a McKinney Dairy Queen that “God doesn’t want me to take your money,” according to the SEC charges.
“Consequently, Paxton claims, he later accepted the shares as a gift,” the charges added. Yet Paxton, who was a state representative at the time, never disclosed the stock as a gift on annual personal financial statements elected officials are required to file with the state.
Federal investigators doubt the shares were given as a gift, instead alleging Mapp handed over the stock to Paxton as a “sales commission” for convincing other people to invest in his company.
State law says elected officials who receive a gift worth more than $250 must disclose it on the “gifts” section of their annual personal financial statements. On his 2011 statement, Paxton for the first time disclosed that he held 10,000 or more shares in Servergy.
He did not also list the shares in the “gifts” section.
Several ethics experts said if an elected official receives stock as a gift, they must disclose the shares in both the “gifts” and “stock” sections on the personal financial statement. The gift section, unlike the stock section, requires the official to divulge the name of the donor.
The only exceptions to this disclosure rule, according to state law, are for gifts that come from a relative by blood or marriage within two degrees, political contributions or lobbyist expenditures.
“It specifically requires that a gift be reported if it is in excess of $250,” said Tim Sorrells, a private practice attorney who served as the general counsel of the Texas Ethics Commission for a dozen years. Renea Hicks, an Austin attorney who specializes in ethics issues, added, “If it was a gift, it seems obvious to me it would have to be listed in the gifts section.”
Paxton did not list the stock under the “gifts” section of his personal financial statement that year or in any year since.
See here and here for some background. This, again, is why Paxton is writing legally meaningless threat letters to Target about bathrooms. It’s all to keep his core supporters focused on the things they like, and not on these unpleasant little allegations about Paxton’s utter lack of moral character. A scoundrel’s gotta do what a scoundrel’s gotta do.
One more thing:
The Texas Ethics Commission can fine someone who breaks disclosure laws $5,000 or three times the amount at issue. Criminal charges for perjury or making false statements would also be possible, said former assistant attorney general Fred Lewis. Failing to file a personal financial statement correctly in accordance with state law is a Class B misdemeanor.
Progress Texas? Texans for Public Justice? This is your cue.