Key figure in Ken Paxton impeachment charged with lying to lenders
The Justice Department on Friday charged Nate Paul, who is separately accused of bribing Texas Attorney General Ken Paxton, with eight felony counts of making false statements to mortgage lending businesses and credit unions.
The Austin real estate investor was indicted by a federal grand jury for allegedly overstating his assets and understating his liabilities to several lending institutions between March 2017 and April 2018, according to U.S. Magistrate Judge Dustin M. Howell.
THE REAL ESTATE INVESTOR: Who is Nate Paul, donor at center of Ken Paxton’s impeachment case?
The indictment also accuses Paul of falsely stating on three occasions that he held millions of dollars in a bank account when the balance was less than $13,000. The lenders were based in Texas, Connecticut, New York and Ireland, according to the charging documents.
Paxton was not mentioned at Paul’s initial hearing Friday or in the indictment.
Paxton, a third-term Republican, was impeached on a 121-23 vote of the Texas House last month amid allegations that he accepted bribes from Paul and abused the authority of his office to help him. The Texas Senate, of which Paxton’s wife Angela is a member, is set to hold a trial this summer.
Paxton, who is suspended pending the outcome, has denied all wrongdoing. He and his lawyers have slammed the impeachment effort as rushed, unfair and politically motivated.
Asked if there was any connection between the case and Paxton’s impeachment, E.G. “Gerry” Morris, Paul’s attorney, said there was “none whatsoever.”
Prior to seeing the charges, one of Paxton’s defense attorneys, Dan Cogdell, theorized that federal authorities arrested Paul to get information on his client.
“It’s the oldest play in the book: 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,” Cogdell said, adding: “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.”
After seeing the indictment, Cogdell said the allegations “have nothing to do with” Paxton, “which speaks volumes.”
“This just shows that there is no ‘there’ there in terms of an illegal relationship between the two men,” he said. “The reality is — at least for Ken Paxton — today is a good day, not a bad one.”
Paul, who was released on bail Friday, will reappear in federal court to be arraigned Thursday, when he’ll have an opportunity to enter his initial plea.
The government intends to seize $172 million worth of Paul’s assets, the “combined principal amount of the loans” he obtained, according to an indictment that was unsealed at Paul’s initial court appearance Friday.
The first public signs that the FBI was investigating Paul surfaced in 2019 when the agency raided his home and businesses.
The next year, Paul became suspicious that his business rivals were working with federal authorities to try to steal $200 million of his properties, according to a complaint he made to the Travis County District Attorney’s Office that was later obtained by the Associated Press.
In 20 articles of impeachment, Paxton is accused of doing multiple favors for Paul using the resources of his office, including pressuring staff to issue legal opinions favorable to him and feeding him a copy of an unredacted FBI brief pertaining to the agency’s investigation of Paul.
In return, Paul allegedly helped Paxton with renovations on his $1 million Austin home and offered a job to a woman with whom Paxton was allegedly having an affair. He had also donated $25,000 to Paxton’s reelection campaign in 2018.
Paul’s complaint about the FBI was also a part of the alleged bribery scheme.
In late 2020, Paxton’s office launched an investigation of Paul’s complaints about the FBI inquiry, according to the articles of impeachment. When top aides in his office objected, Paxton went around them and hired a young Houston attorney as a “special prosecutor” and authorized him to do the work, even without a signed contract in place.
The lawyer filed 39 grand jury subpoenas, some of which were served on banks that had no direct relation to Paul’s original complaint, according to investigators with the House committee that recommended Paxton’s impeachment. It is unclear whether there is any overlap between those subpoenas and any of the financial institutions to whom Paul is accused of lying in this week’s indictment.
Paxton dropped the case in October 2020, about a week after news broke that eight of his top aides had reported him to federal law enforcement for allegedly taking bribes from Paul and abusing his office. Their complaint ended up becoming the basis for the House’s impeachment.
That wasn’t the end of it for Paul. In late 2021, he filed a suit against state and federal authorities, arguing that they had acted improperly in their investigation of him and violated his civil rights. About a year later, the case was dismissed by a federal judge. Paul has appealed to the 5th U.S. Circuit Court of Appeals.
It is yet to be seen whether the prosecution or defense will call Paul as a witness in the impeachment trial. One wrinkle is that under state law, a witness called to testify who claims that testimony will incriminate them cannot be indicted or prosecuted about the subject of their testimony.
Another complicating factor for Paul is the looming possibility of state jail time. Paul is in the process of appealing an order by a district court judge in Travis County finding him in contempt of court for ignoring a court order and lying under oath. He made the statements during hearings on a case in which he’s accused of fraud by a nonprofit investor.
The Austin-based 3rd Court of Appeals upheld the contempt order in March. The case is now before the Texas Supreme Court, which has temporarily stayed the case until it makes a final decision, allowing Paul to remain free in the meantime.
Source: Houston Chronicle
