Federal prosecutors charge Texas businessman linked to Attorney General Ken Paxton's impeachment
A Texas businessman at the center of the scandal that led to the historic impeachment of state Attorney General Ken Paxton was charged Friday with eight counts of making false statements while seeking loans from mortgage lenders in 2017 and 2018.
The federal indictment of real estate developer Nate Paul is the result of a yearslong FBI investigation — a probe Paxton involved his office in, setting off a chain of events that ultimately led to his impeachment and suspension from office last month.
Paul, 36, did not enter a plea during his initial appearance in an Austin court nor visibly react as the charges against him were read. He entered the federal courtroom shackled and wearing jeans, a blue shirt and Nikes, and was released ahead of trial but ordered to surrender his passport and inform the court of any travel outside Texas.
One of Paul's lawyers, David Gerger, said his client may comment after his court appearance. Dan Cogdell, a defense attorney for Paxton, said Thursday that he had no information on the arrest.
Paul is accused of overstating his assets and understating his liabilities while seeking loans. In some cases, prosecutors said, Paul told banks he had $18 million in an account when he had less than $13,000. In another case laid out in the 23-page indictment, Paul is accused of having $28 million in liabilities but giving a credit union in 2018 a far lower number.
Paul is charged with 8 counts of loan fraud.
— Andrea Lucia (@CBS11Andrea) June 9, 2023
He's accused of lying to financial institutions - in some cases about how much he was worth, in others how much debt he had.
As a result, the indictment says, he was given - $172 million in loans. @CBSNewsTexas pic.twitter.com/MBq2I2Zeao
FBI agents examining Paul's troubled real estate empire searched his Austin offices and palatial home in 2019. The next year, eight of Paxton 's top deputies reported the attorney general to the FBI on allegations of bribery and abuse of office, including for hiring an outside lawyer to examine the developer's claims of wrongdoing by federal agents.
The allegations by Paxton's staff prompted an FBI investigation, which remains ongoing, and are central to 20 articles of impeachment overwhelmingly approved by the GOP-led state House of Representatives. They include abuse of public trust, unfitness for office and bribery.
The impeachment accuses Paxton of using his office to help Paul over his unproven claims of an elaborate conspiracy to steal $200 million of the developer's properties. The bribery counts say that in return the developer employed a woman with whom Paxton had an extramarital affair and paid for expensive renovations to the attorney general's million-dollar Austin home.
Paxton's lawyers sought to rebut the latter claim this week by releasing a bank statement that included a 2020 wire transfer purportedly showing Paxton, and not a donor, paying more than $120,000 for a home renovation. But the document raised new questions about the men's dealings.
The wire transfer was dated Oct. 1, 2020 — the same day Paxton's deputies signed a letter informing the head of human resources at the Texas attorney general's office that they had reported their boss to the FBI. The $121,000 payment was to Cupertino Builders, whose manager had done work for Paul and had an email address with his company, state corporation and court records show.
Paul has faced numerous lawsuits from creditors and business partners over the years, with several of his companies filing for bankruptcy or being placed under the supervision of court-appointed overseers. Last year, one of those receivers wrote in a report that Cupertino Builders was used for "fraudulent transfers" from Paul's business.
Paul has denied bribing Paxton. The attorney general has also broadly denied wrongdoing and said he expects to be acquitted during an impeachment trial in the state Senate, where his wife is a member.
The Senate will set its own rules for a trial that has little precedent, given that Paxton is just the third sitting official in Texas history to be impeached. The proceeding is set begin no later than Aug. 28.
Paxton was separately indicted on securities fraud charges in 2015, though he has yet to stand trial.