Earlier this month, I reported allegations that CopSync, Inc. offered an insider stock deal to Robertson County officials shortly before commissioners voted on doing business with the company, and this afternoon I learned that the Dallas-based company hired a Florida law firm to investigate those allegations.
Michael D. Harris, a former lawyer for the U.S. Securities Exchange Commission, wrote in an email this afternoon that his firm would be investigating on behalf of the non-employee directors of the company. Mr. Harris wrote that his investigation likely would be completed late next week “unless we find other areas of inquiry.” CopSync has contracts with hundreds of local law enforcement agencies around the U.S., and as I noted in my earlier post, a December 23, 2016 letter from the CopSync CEO infers that the private offerings may have been common practice.
After my last post, Robertson County Judge Charles Ellis indicated that he was unaware of a private stock offering, but other county officials have remained silent (DA Coty Siegert previously indicated that he was unaware of the private stock sale). Meanwhile, one of the non-employee directors of CopSync, Joel Hochberg, resigned from the board on January 16, 2016, i.e., ten days after my blog post about the suspicious stock offerings to government officials.
Mr. Hochberg was a business partner with Texas Attorney General Ken Paxton, and both men are major investors in CopSync. Their relationship appears to have soured, however, because Mr. Hochberg is one of the two victims in the criminal fraud case pending against Mr. Paxton in Collin County.
The CopSync board appointed Larry Schafran to fill the vacancy created by Mr. Hochberg’s resignation, according to a January 20, 2017 report that the company filed with the SEC. The report noted that Mr. Schafran, a New York investor, was also being appointed to the company’s audit committee. Mr. Schafran has served on numerous boards and appears to have a lot of investing experience, so I have to wonder if Mr. Hochberg resigned in order to bring Mr. Schafran on board and protect his investment.