Businessman linked to Texas AG Ken Paxton’s impeachment charged with lying to get $172M in loans

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A Texas businessman who played a central role in the scandal leading to the historic impeachment of Texas Attorney General Ken Paxton has been charged with making false statements to mortgage lenders in order to secure $172 million in loans.

Nate Paul, a real estate developer, was indicted by federal authorities following an extensive FBI investigation that Paxton’s office was initially involved in. This investigation triggered a chain of events that eventually led to a separate federal probe into Paxton himself, resulting in his impeachment and suspension from office last month.

Paul, 36, appeared in an Austin court wearing jeans, a blue shirt, and Nikes, with his hands shackled. During the hearing, he did not enter a plea or display any visible reaction as the charges were read. He was released pending trial but required to surrender his passport and inform the court of any travel outside of Texas.

The indictment against Paul consists of eight counts of making false statements to mortgage lenders in the United States and Ireland. Notably, the hearing did not mention Paxton or the attorney general’s office.

Following the hearing, Paul left through a back door and entered a car in a gated area outside the courthouse. His defense attorney, Gerry Morris, stated that Paul vehemently denies the charges and maintained that he is innocent. Morris also confirmed that he did not know the last time Paul had contact with Paxton. On the other hand, Dan Cogdell, an attorney representing Paxton, speculated that prosecutors might leverage the charges against Paul to persuade him to cooperate in the investigation of the attorney general.

According to prosecutors, Paul is accused of inflating his assets and downplaying his liabilities while applying for loans between 2017 and 2018. They allege that he provided false and counterfeit records to financial institutions. One instance mentioned in the 23-page indictment involved Paul claiming to have $18 million in an account when he actually had less than $13,000. Another case outlined in the indictment accused Paul of reporting around $3 million in liabilities to a credit union while he owed over $28 million at that time.

Although a grand jury issued the indictment earlier, it remained sealed until after the court hearing. Each count of making false statements carries a potential penalty of up to 30 years in prison and a fine of up to $1 million.

In 2019, FBI agents searched Paul’s troubled real estate empire, including his Austin offices and luxurious residence. The following year, eight of Paxton’s top deputies reported him to the FBI, alleging bribery and abuse of office, including hiring an external lawyer to investigate Paul’s claims of misconduct by federal agents.

These allegations from Paxton’s staff prompted an FBI investigation, which was later taken over by the Justice Department’s Public Integrity Section. The allegations also formed the basis for 20 articles of impeachment approved by the Republican-led state House of Representatives, citing abuse of public trust, unfitness for office, and bribery.

The impeachment accuses Paxton of leveraging his position to assist Paul with his unverified claims of a complex conspiracy to steal $200 million worth of the developer’s properties. The bribery charges state that Paul employed a woman with whom Paxton had an extramarital affair and funded lavish renovations to the attorney general’s million-dollar Austin home as a quid pro quo.

Paxton’s defense team recently released a bank statement containing a wire transfer dated October 1, 2020, allegedly showing Paxton personally paying over $120,000 for home renovations. However, this document raised further questions about their dealings. The payment was made to Cupertino Builders, a company associated with Paul, suggesting potential connections between them.

Over the years, Paul has faced multiple lawsuits from creditors and business partners, resulting in several of his companies filing for bankruptcy or being placed under court-appointed supervision. Last year, a court-appointed overseer reported fraudulent transfers from Paul’s business involving Cupertino Builders.

Paul has consistently denied bribing Paxton, while the attorney general maintains his innocence and expects to be acquitted during the upcoming impeachment trial in the state Senate, where his wife serves as a member. The Senate will establish its own rules for the trial, which is unprecedented given that Paxton is only the third sitting official in Texas history to face impeachment. The trial is scheduled to commence no later than August 28.

Paxton was previously indicted on securities fraud charges in 2015, but he has not yet faced trial.

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Reporting contributed by Bleiberg from Dallas.

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• Texas Attorney General Ken Paxton Impeachment
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• Potential Penalties for False Statements to Mortgage Lenders