Nate Paul, the Austin real estate developer central to allegations of illegal conduct by Ken Paxton, Texas’ now-suspended attorney general, was arrested by the FBI on Thursday.
Paul was booked into the Travis County Jail at 4:25 p.m. on a federal warrant, said Kristen Dark, a spokesperson for the Travis County Sheriff’s Office. The nature of the charges against him have not been publicly disclosed.
Paul’s attorney did not immediately respond to a request for comment. Calls to the U.S. Attorney’s Office for the Western District and Paxton were also not immediately returned.
A spokesperson for the FBI office in San Antonio declined comment, citing Justice Department guidelines.
It’s not immediately clear whether his arrest is related to the allegations against Paxton, but Paul is at the center of the abuse-of-office complaints against the three-term Republican attorney general who was impeached by the Texas House last month. Paxton is currently suspended from his official duties and awaiting an impeachment trial in the Senate, which would require a two-thirds vote to permanently remove him from office.
In March, Paul was ordered to spend 10 days in jail after being found in contempt of court in a case related to the allegations against Paxton. In that case, Paul was fined $180,000 for lying in district court about money transfers he made in violation of a court order in a lawsuit filed by The Roy F. & Joann Cole Mitte Foundation, an Austin-based nonprofit that sued Paul for fraud.
Paul lost an appeal of that contempt of court finding and was ordered to jail in March. But he appealed again to the Texas Supreme Court, which blocked his jail order temporarily and is still considering that appeal.
As of Friday morning when I started drafting this post, we don’t have any more facts about the arrest. But we do have some speculation.
A lead prosecutor in the impeachment case, Dick DeGuerin, hinted Thursday night that the arrest is linked to the allegations against Paxton.
“The dominoes are falling,” DeGuerin said.
Dan Cogdell, one of Paxton’s defense attorneys in the impeachment case, also surmised the arrest is related to the Paxton investigation.
“It’s the oldest play in the book,” Cogdell said, adding that he was merely speculating as the charges against Paul are still unknown. “You’ve got two people you believe to be in a crime together, you arrest the first one and try to get them to cooperate on the other one.”
Asked what incriminating information Paul would have on Paxton, Cogdell said: “Sometimes people cooperate and say things that are true; sometimes people cooperate and say things that are untrue to lessen their exposure. We don’t know what’s going to happen.”
That was Thursday. On Friday, Nate Paul was in court, and we learned more.
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.
Okey then. Just a reminder, the keys to both the current FBI investigation of Ken Paxton and the basis of the impeachment were the shady favors Paxton did for Paul to interfere with the FBI investigation into Paul. So yeah, it’s entirely likely that they’re going to put the squeeze on Paul to get to Paxton. How successful they’ll be, that’s to be determined. But surely that’s where we’re going. What a time to be alive. Reform Austin, Texas Public Radio, and the Chron have more.