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Nate Paul, the Austin real estate investor central to allegations of illegal conduct by suspended Attorney General Ken Paxton, has been charged with eight counts of making false statements to financial institutions.
Paul, 36, allegedly overstated his assets and understated his liabilities to fraudulently obtain loans, according to a 23-page indictment filed by federal prosecutors Friday.
The government is seeking $172 million in restitution from Paul.
U.S. Magistrate Judge Dustin Howell laid out the charges — which focus on actions Paul took in 2017 and 2018 to allegedly mislead mortgage lenders and credit unions — Friday morning to ensure Paul understood them.
Paxton was not mentioned in the indictment, nor was he discussed during a half-hour proceeding Friday in Austin’s federal courthouse, where Paul appeared shackled and wearing a blue button-down shirt, jeans and white Air Jordans. He answered Howell’s questions softly, simply stating, “Yes, Your Honor.”
Paul is due back in court June 15 for arraignment. He will be released today on conditions including that he surrender his passport and leave Texas only after notifying the court. His in-state travel will be unrestricted. Assistant U.S. Attorney Alan Buie, who represented the government at the hearing and who specializes in white collar crimes, said Paul should be allowed to continue to run his businesses.
Paul’s lawyer, Gerry Morris, said outside the courtroom that the charges have nothing to do with Paxton, adding that he had “no idea” when Paul last spoke with the now-suspended attorney general.
Prosecutors allege that Paul repeatedly misstated his financial situation to obtain loans from credit unions and mortgage lenders in New York, Connecticut and Ireland.
“On three occasions, Paul gave a financial institution a false and counterfeit document, representing that one of Paul’s bank accounts held millions of dollars when in fact the balance of the account was less than $13,000,” the indictment stated.
In another instance, prosecutors alleged, Paul told a lender he owned 100% of a company that was to receive a loan, but another firm that was not affiliated with Paul owned 91% of the company.
In a third case, Paul told a lender that his total liabilities were $3.4 million when they exceeded $28 million. “Therefore, Paul knowingly made a false statement and report when he said that the amount of his total liabilities was only $3,422,056,” the indictment said.
Paul was arrested by the FBI and booked Thursday afternoon into the Travis County Jail on a federal warrant, but the nature of the charges against were not initially disclosed. He is represented by Morris, a 40-year Austin defense attorney and past president of the National Association of Criminal Defense Lawyers and the Texas Criminal Defense Lawyers Association.
Paul is a central figure in the abuse-of-office and bribery allegations made against Paxton by former high-ranking officials, all of whom were subsequently fired or resigned from the attorney general’s office after taking their concerns to the FBI in 2020. Their accusations — focusing on help Paxton gave Paul after the real estate investor’s Austin home and businesses were searched by federal law enforcement — prompted an FBI investigation and formed the lion’s share of 20 articles of impeachment against Paxton that the Texas House adopted last month.
Paxton is currently suspended from his official duties and awaiting an impeachment trial in the Senate, where a two-thirds vote would permanently remove him from office. A specially appointed panel of senators will present rules of procedure for the trial to the full Senate on June 20, according to a resolution that set the trial to begin no later than Aug. 28.
Paul, once considered a major player in the real estate business, was one of the largest owners of real estate in Austin through his investment firm, World Class Capital Group. A string of bankruptcies followed. In 2019, the FBI and U.S. Treasury Department agents searched Paul’s home and business offices, bringing Paul and Paxton together.
Paul complained that the federal agents doctored search warrant records, and Paxton directed his agency to take a number of “bizarre, obsessive” actions to investigate Paul’s complaint, according to a whistleblower lawsuit filed by four Paxton deputies who had been fired.
In 2018, Paul had given a $25,000 donation to Paxtons campaign. The former top aides also claimed that Paul helped Paxton fund an extensive remodel of his Austin house and gave a job to a woman with whom Paxton allegedly had an affair. Paxton is married to state Sen. Angela Paxton, R-McKinney.
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This article originally appeared in The Texas Tribune at https://www.texastribune.org/2023/06/09/nate-paul-federal-charges/.
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