AUSTIN, Texas (CN) — An Austin-based real estate developer has been charged with making false statements to financial institutions, on top of prior accusations that he gave bribes to impeached Texas Attorney General Ken Paxton.
Nate Paul's 23-page indictment unsealed Friday outlines eight felony counts of making false statements to mortgage lenders and credit unions.
According to the indictment, “From March 2017 through April 2018, Paul made a number of false statements and reports for the purpose of influencing financial institutions to make loans to Paul's companies.”
Paul, founder of World Class Holdings, allegedly provided a counterfeit document to more than one financial institution that showed his bank accounts holding millions, when in reality they held less than $13,000.
In other instances, Paul failed to accurately disclose his liabilities to lenders, according to prosecutors.
"Specifically, Paul stated and reported that, as of March 1, 2018, he owed only $3,307,281 in 'total liabilities,'" the indictment states. "In fact, as Paul knew he owed, directly or indirectly, at least $28,620,000 in addition to the liabilities he disclosed."
Prosecutors want Paul to pay $172 million in restitution, while each of the eight counts against him carries a maximum of 30 years behind bars.
Paul is said to have made false statements to banks based in Texas, Connecticut, New York and Ireland.
News of Paul's arrest broke Thursday evening. He was held in a Travis County jail on a warrant from the FBI, before being released Friday on the condition that he surrender his passport and only leave the state of Texas after notifying the court.
Paul is expected to be back in a federal courthouse on June 15 for his arraignment.
Despite not being mentioned in the indictment, Paxton, the state's thrice-elected Republican attorney general, looms large in the background of Paul's arrest.
In 2018, the real estate developer gave Paxton a $25,000 donation to his campaign. However, their relationship fell under scrutiny when, in 2020, top aides at the AG's office told federal investigators that Paxton had been using his office to benefit Paul.
They allege that Paxton issued legal opinions to stave off the foreclosure of properties belonging to Paul and obtain non-public documents relating to the federal investigation into Paul and his business dealings. In addition, the whistleblowers said that Paxton accepted bribes from Paul in the form of renovations to his Austin home and a job for a woman with whom Paxton engaged in an extramarital affair with.
The whistleblowers went on to file a wrongful termination suit against Paxton, saying that he retaliated against them for reporting him to investigators. Earlier this year, Paxton asked the Texas Legislature to fund a $3.3 million settlement to the lawsuit, leading to a House Investigating Committee inquiry into the allegations against Paxton.
On May 25, the investigating committee filed 20 articles of impeachment against Paxton, finding that he, among other things, abused his office for his personal gain and to benefit Nate Paul.
Six of the articles directly reference Paul and four implicate Paxton’s actions he took against the whistleblowers.
Paxton remains suspended from office pending his trial in the Texas Senate. Two-thirds of the 31-member chamber are required to permanently remove him from office. Complicating that vote is Paxton’s wife, Angela, who has served as a state senator since 2019. She has not indicated yet whether she plans to recuse herself from the trial.
Earlier in the week, Tony Buzbee, a high-profile Houston lawyer and Paxton’s lead defense attorney, said his client “will never be convicted in the Texas Senate.” Casting doubt on the evidence, Buzbee has claimed the investigating committee’s findings were based solely on hearsay.
The Senate trial is set to begin no later than Aug. 28.
It is unclear how Paul's arrest will play into Paxton’s trial and the ongoing FBI investigation into him.
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