Austin Real Estate Developer Nate Paul’s Arrest, What We Know So Far

Nate Paul, the Austin real estate developer whose alleged bribes of Texas Attorney General Ken Paxton were central to the A.G.’s impeachment last month, spent the night in the Travis County Jail Thursday.

The FBI arrested Paul on a federal warrant Thursday, and a judge laid out Paul’s charges Friday: eight counts of making false statements to financial institutions. The government is seeking $172 million in restitution from Paul over his allegedly overstating his assets to fraudulently obtain loans in 2017 and 2018, according to the Texas Tribune.

San Antonio criminal defense attorney Shannon Locke pointed out in a Thursday Tweet that attorneys representing people under federal investigation can normally work with the Department of Justice to schedule a court summons (meaning, the client turns themself in) to avoid being held in jail. According to Locke, Paul sitting in Travis County Jail means he was picked up on a federal warrant and has “the longest possible road to getting out of custody.” Locke reasoned that either Paul did not have an attorney who asked to turn him in, or if he did, the DOJ “refused to play ball and wants [Paul] sitting in the County Jail.”

Prior to Paul's first appearance in court Friday, Paxton’s defense team had drawn connection between the attorney general's impeachment and Paul's arrest – Dallas Morning News reporter Lauren McGaughy interviewed Dan Cogdell, one of the A.G.’s defense attorneys, who told her that the FBI did not try to reach him ahead of Paul’s arrest, but said he assumes the charges involve Paxton.

“You don’t have to be Nostradamus to assume that they’re going to try to flip Nate Paul to testify against Ken [Paxton]. I don’t know that for a fact. But I’d be very surprised if that wasn’t the case. Because otherwise, you know, logically [the FBI] would have arrested them both at the same time,” Cogdell said in the interview.

It’s not the first time the FBI has investigated Paul, who at one time was one of Austin’s wealthiest real estate owners. In 2019, the FBI raided some of Paul’s local properties, and Paul filed for more than a dozen bankruptcies. When some of Paxton's top lieutenants pointed out to Paxton that his strange moves to help Paul after the search and bankruptcy were illegal, Paxton fired them, and so the dominoes fell. They filed a whistleblower lawsuit against Paxton in 2020, Paxton agreed to a $3.3 million settlement to get out of it, Paxton asked the Texas Legislature if taxpayer money could pay that settlement, and, on May 27, the House voted to impeach Paxton in a landslide.

The General Investigating Committee, which presented findings in support of Paxton's impeachment to the full House, revealed that, among other illegal activities, Paxton tried to provide Paul with a secret FBI document detailing what the agency gleaned from its 2019 search of his properties. Paxton “told OAG staff that he didn't want to help the FBI or [the Texas Department of Public Safety] in any way. Attorney General Paxton then took the entire file that had all the responsive documents, including documents sealed by federal court, and didn't return them for approximately 10 days,” Rep. David Spiller told House members. The committee found that Paxton also instructed his subordinates to issue an unusual Office of the Attorney General opinion to save 15 of Paul's properties from foreclosure, and in exchange Paul gave Paxton a $20,000 check. The Senate will hold a trial for Paxton sometime this summer.

“You’ve got a corruption problem when one of the most corrupt institutions in the state, the legislature, thinks you’ve got a big corruption problem,” U.S. Rep. Greg Casar, D-Austin, told the Chronicle Friday. “The corruption in this case is so extreme that even the most corrupt legislators are gonna have trouble defending it.”