Texas Attorney General Ken Paxton’s Relationship with Real Estate Investor Nate Paul Under FBI Spotlight

Austin investor Nate Paul at center of allegations against Texas AG Ken Paxton

October 3, 2020

The top state officials who staged a mutiny against Attorney General Ken Paxton warned that he was using his office to benefit campaign donor Nate Paul, an embattled Austin real estate investor, interviews and records show.

Paul, a once high-flying businessman whose offices were reportedly raided by the FBI last year, gave Paxton $25,000 ahead of the attorney general’s hard-fought re-election battle in 2018.

The No. 2 official in the attorney general’s office, First Assistant Attorney General Jeff Mateer, put Paul at the center of allegedly illegal activities by Paxton in a text message sent Thursday. Mateer, who resigned Friday, joined six other high-ranking employees in accusing Paxton, the state’s top law enforcement officer, of abuse of office, bribery and improper influence.

“Each of the individuals on this text chain made a good faith report of violations by you to an appropriate law enforcement authority concerning your relationship and activities with Nate Paul,” Mateer wrote in the text message, which was obtained by Hearst Newspapers.

The group requested an immediate meeting with Paxton, but the attorney general said he was “out of the office” and asked them to email him with their concerns. The Austin American-Statesman, which first reported on the allegations against Paxton, published a letter the officials sent to the attorney general’s human resources office on Oct. 1.

Neither Paul nor his attorney returned calls or messages left on their voicemails.

A spokeswoman for the attorney general’s office said in a statement that “the complaint filed against Attorney General Paxton was done to impede an ongoing investigation into criminal wrongdoings by public officials including employees of this office. Making false claims is a very serious matter and we plan to investigate this to the fullest extent of the law.” She declined to elaborate.

The uprising against Paxton crystallized when a special prosecutor he appointed, Houston lawyer Brandon Cammack, issued grand jury subpoenas last week targeting “adversaries” of Paul, a senior AG official told Hearst Newspapers.

Those subpoenas spurred the seven top AG officials into action, the official said. One of the signatories on the letter accusing Paxton, J. Mark Penley, the deputy attorney general for criminal justice, filed a motion in state district court in Austin to halt the subpoenas. The motion to “quash” them was granted on Friday, records obtained by Hearst Newspapers show.

In filing the subpoenas, Cammack “represented that he was acting on behalf of the office of the Attorney General as a Special Prosecutor,” Penley’s motion said. “He is not properly authorized to act as a Special Prosecutor, and … has no authority to appear before the grand jury or issue grand jury subpoenas.”

Cammack declined to comment.

An official with the Travis County District Attorney’s office said the agency does not have an investigation into Ken Paxton. The FBI and U.S. Attorney’s offices both declined to comment.

Top Republicans statewide on Sunday acknowledged the gravity of the allegations but stopped short of calling for Paxton to step down.

“These allegations raise serious concerns,” Gov. Greg Abbott, who served as Attorney General for 12 years prior to Paxton, said in a statement. “I will withhold further comment until the results of any investigation are complete.”

Lt. Gov. Dan Patrick said the matter is “obviously concerning.”

“I will wait until the investigation is complete before making any additional comments,” Patrick said.

Neither responded to questions about what they believe should happen to Paxton’s job in the meantime.

A spokeswoman for House Speaker Dennis Bonnen did not respond to a request for comment.

A real estate empire under a cloud

The genesis of Paxton’s relationship with the real estate investor Paul was not clear on Sunday.

Paul cut a wide swath through Texas real estate circles in a short time, amassing a large portfolio of valuable holdings — particularly in Austin, his home since 2002 — in less than a decade and by the age of 30.

According to published reports, his World Class Holdings owned the 156-acre former 3M campus, in northwest Austin, as well as prime downtown parcels. Together with a portfolio of storage facilities located in several states, the company’s worth at one time reportedly approached $1 billion.

Personally, Paul owns a 9,000 square-foot mansion west of downtown Austin appraised at $2.4 million, according to Travis Central Appraisal District records.

Recently, the business empire has shown signs of severe stress. Over the past year, 18 of Paul’s companies have declared bankruptcy, according to the Austin Business Journal, which has covered Paul’s comings and goings extensively since his name suddenly became the most-searched phrase on the newspaper’s website, in 2014.

World Class also is embroiled in several lawsuits involving investors and partners. And in August 2019, his business and home were reportedly raided by federal and state agents, although no criminal charges have been filed.

According to published reports, Paul, the son of Indian immigrants, moved to Austin from Victoria as a teenager in 2002. He attended the University of Texas for three years before dropping out.

In 2006, he formed World Class, acquiring his first property in 2007. “I started with zero. There was no legacy. I’m self-made,” he said in a 2015 Austin Business Journal article.

His sister, Sheena, joined the company as chief operating officer, according to a profile of her in Austin Woman.

“Nate came into the world as a business person,” she told the magazine. “When he was 4 or 5 years old, he wouldn’t carry around trucks or G.I. Joes; he carried around a yellow note pad. And he still does, writing down ideas. It’s almost like a security blanket.”

Paul said he was quickly able to acquire properties because of real estate prices suppressed by the 2009 recession. In 2015, he made a splash by bidding $800 million for a portfolio of properties including New York City’s legendary Plaza Hotel.

He also began raising his personal profile. In 2015, he was photographed with then-candidate Donald Trump, a meeting set up by a business associate who once worked for Trump.

He has reportedly hobnobbed with celebrities, including Los Angeles Lakers guard Avery Bradley, whom he met at UT; and actor Leonardo DiCaprio.

In 2018, he donated just under $50,000 to a variety of Republican politicians, Texas Ethics Commission records show.

Paxton criminal case could be affected

The recent allegations about Paxton are compounded by an ongoing criminal case against him that has been churning for more than five years with no trial in sight. It now sits before a Harris County judge who will decide whether to move the case to Collin County, as Paxton’s lawyers have requested, or keep it under his jurisdiction.

In that case, Paxton is charged with two felonies, accused of soliciting investments in a technology company without notifying investors that he would be compensated for it. He’s also charged with a third-degree felony of failing to register with the state as an investment adviser. Paxton has denied the claims and characterized the case as “politically motivated.”

Kent Schaffer, a special prosecutor in that case, said Saturday that the latest accusations, if they leads to charges, could imperil Paxton’s odds of securing any kind of deal to resolve the criminal case.

NEW: This is the letter sent by 7 top aides to Texas Attorney General Ken Paxton alleging the state’s top lawyer has committed multiple criminal violations. @statesman @KVUE. pic.twitter.com/1qNv290tJm

— Tony Plohetski (@tplohetski) October 4, 2020

Texas Attorney General Ken Paxton Faces More Bribery and Corruption Charges, from His Own Team. Will he Be Blown Away? – https://t.co/KmVMJpIx4U

— LawsInTexas (@lawsintexasusa) October 4, 2020