The US Securities and Exchange Commission is pressing fraud charges against a Texas-based technology company and its founder for boosting stock sales with false claims.

The company allegedly claimed to have a revolutionary computer server and big-name customers placing orders to buy it. Also charged in the SEC’s complaint is Texas attorney-general Ken Paxton and a former member of the company’s board of directors for allegedly recruiting investors while hiding the fact that they were being paid to promote the stock.

The SEC alleges that Servergy Inc and William Mapp III sold $26 million worth of company stock in private offerings while misleading investors to believe that the Cleantech CTS-1000 server (the company’s sole product) was especially energy-efficient. In fact it could not compete against its competitors. Mapp is also accused of enticing prospective investors by falsely claiming that well-known companies including Amazon were ordering the CTS-1000.

The company agreed to pay a $200,000 penalty to settle the SEC’s charges. The litigation continues against Mapp in the US District Court for the Eastern District of Texas.

While serving in the Texas House of Representatives, Paxton allegedly reached an agreement with Mapp to promote Servergy to prospective investors in return for shares of Servergy stock. He is said to have raised $840,000 from them for Servergy and received 100,000 shares of stock in return, but did not tell them about his commissions while recruiting them. People who recruit investors have a legal obligation to disclose any compensation they are receiving to promote a stock.

Meanwhile, former Servergy director Caleb White allegedly raised more than $1.4 million for Servergy and received $66,000 and 20,000 shares of Servergy stock while never disclosing these commissions to investors. White has agreed to settle the SEC’s charges by paying the $66,000 back and returning his shares of Servergy stock to the company. The SEC’s litigation continues against Paxton.

The SEC’s complaint charges Servergy, Mapp, Paxton, and White with violating Sections 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.  Servergy, Mapp, and White also allegedly violated Sections 5(a) and (c) of the Securities Act, and Paxton and White allegedly violated Section 17(b) of the Securities Act and Section 15(a) of the Exchange Act.

Servergy and White neither admitted nor denied the SEC’s charges in their settlements.