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April 11, 2016

Posted  May 2, 2016

The SEC announced fraud charges against Texas-based technology company Servergy Inc. and its founder and former CEO William Mapp III for boosting company stock sales with false claims about a supposedly revolutionary computer server and purported purchases by big-name companies.  The SEC alleges that Servergy and Mapp sold $26 million worth of stock in private offerings while misleading investors to believe that the “Cleantech CTS-1000” server (the company’s sole product) was especially energy efficient and would compete directly with top server makers like IBM, Dell, and Hewlett Packard.  In fact, 32-bit processors like the CTS-1000 were being phased out of the industry and could not compete with the high-performance 64-bit processors being produced by competitors.  In addition, the SEC alleges that when Servergy was low on operating funds, Mapp enticed prospective investors to purchase by falsely claiming well-known companies, such as Amazon, had placed orders for the servers.  In fact, an Amazon employee had merely contacted Servergy about testing the product for his personal use.  Servergy will pay $200,000 to settle the SEC’s charges.  The litigation against Mapp continues in the Eastern District of Texas.  Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of Servergy’s board of director, Caleb White.  The SEC alleges that Paxton and White recruited investors for Servergy while hiding that they were being compensated to promote the company’s stock.  White will pay $66,000 to settle the charges.  SEC

Tagged in: Financial and Investment Fraud,