Texas businessman central to AG Ken Paxton impeachment charged with financial crimes

Tribune Content Agency

AUSTIN, Texas — The real estate developer at the center of impeachment allegations against Attorney General Ken Paxton has been charged with multiple federal felonies related to alleged financial crimes.

Nate Paul, 36, was indicted on eight felony counts of making false statements to mortgage lenders and credit unions to secure loans for his businesses, according to a 23-page federal indictment filed Friday.

The alleged crimes in the indictment date to 2017 and 2018. The lenders were based in Ireland, New York, Connecticut and Texas, according to the indictment.

Each count carries a maximum penalty of up to 30 years in prison and a $1 million fine. The government wants to seize several of Paul properties and is seeking a monetary judgement of $172 million that represents the value of the alleged fraudulent loans he received, according to the indictment.

Paxton, who is also under FBI investigation, is not mentioned in the indictment. However, the attorney general’s defense attorney told The Dallas Morning News on Thursday that he believes the FBI will try to flip Paul against Paxton.

The indictments, which a grand jury returned on June 6, were announced in federal court in Austin Friday. Paul appeared in front of U.S. Magistrate Judge Dustin M. Howell wearing a long sleeved blue colored shirt, baggy jeans and white Nike shoes, as well as shackles.

He must return to court on June 15 for arraignment. In the meantime, Howell ordered Paul released on bond. Paul will be allowed to travel unrestricted within Texas for business purposes and leave the state if he notifies the court and provides an itinerary. He must surrender his passport.

Paul’s lawyers and attorneys for the federal government declined to comment after Friday’s court appearance.

The FBI initially detained Paul in the Travis County jail Thursday afternoon.

A controversial figure in the world of Texas real estate, Paul through his primary company, World Class, has owned properties across the state. He has been enmeshed in repeated lawsuits with business associates who’ve accused him of reneging on deals, and has lost numerous high-profile properties to foreclosure and forced sales in the last several years.

Paul has been under FBI scrutiny since at least 2019, when the agency raided his business and home in Austin. He then lashed out at the state and federal authorities probing him, suing them and saying he was being unfairly targeted.

The next year, the FBI launched an investigation into Paxton after several of his high-ranking employees reported the attorney general had repeatedly abused his office to help Paul, including in ways they said would have shielded the developer from law enforcement scrutiny.

Paul contributed $25,000 to Paxton’s reelection campaign in 2018.

The employees who made the allegations, all of whom are no longer at the agency, later sued Paxton under state whistleblower laws alleging retaliation. Earlier this year, they agreed to a settlement that would have resulted in Paxton apologizing and the state doling out $3.3 million to the whistleblowers.

House lawmakers bristled at the funding request from Paxton’s agency, and instead quietly launched their own investigation into the whistleblowers’ allegations and the attorney general’s alleged misdeeds.

The probe culminated in the GOP-led Texas House overwhelmingly voting to impeach Paxton last month. Among the articles of impeachment were the whistleblowers’ accusations that Paxton in 2020 repeatedly abused his power to help Paul. In exchange, Paul allegedly bribed Paxton by renovating his home and employing a woman with whom the attorney general allegedly had an affair.

The Senate will convene a trial later this summer to determine whether to remove Paxton from office.

Paxton has previously denied wrongdoing, and called the whistleblower and impeachment allegations against him a partisan attack. He has retained two Houston-based attorneys to aid in his defense.