AUSTIN, Texas — Austin real estate developer Nate Paul, already a central figure in the impeachment case against Attorney General Ken Paxton, now faces an eight-count indictment in which it is alleged that Paul lied to multiple financial institutions in order to secure financing for many of his bigger loans.
The 23-page indictment, handed down by a federal grand jury in Austin on Tuesday, outlines claims Paul made to secure multiple multi-million dollar loans. Those loans, made between March 2017 and April 2018, totaled $172 million. According to the indictment, on at least three occasions, Paul presented counterfeit documents that showed he had tens of millions in his account, while his actual account contained slightly less than $13,000. In other charges, he minimized his actual financial liabilities and the liquidity of his assets, both substantial factors of approving loans.
Paul, who was taken into custody on Thursday afternoon, was released on bail on Friday morning. If Paul is convicted, each of the eight counts can carry a maximum of 30 years in prison and a fine of up to $1 million.
Only six years ago, Paul, a onetime college dropout, was hailed by Forbes magazine as a rising Texas tycoon. Barely 30, Paul drove around Austin in a Bentley, lived in a massive West Austin mansion and was tied to many of Austin’s highest-profile commercial properties through his company, World Class Holdings, which he ran with his sister Sheena, a lawyer. At one time, the prime 156-acre former 3M campus in North Austin belonged to Paul. So did the land under the IHOP on Cesar Chavez, the plot next to the Four Seasons Hotel and a block alongside the Austin Convention Center.
At the time, it was impossible to drive Interstate 35 through downtown Austin without seeing Paul’s distinctive black World Class Holdings signs. Paul’s earliest investors included the Austin Police Retirement System, as well as the nonprofit Mitte Foundation and former Los Angeles Laker Avery Bradley.
Today, Paul is facing legal cases from multiple investors in his two companies: World Class Holdings and Great Value Storage. Seth Kretzer, the Houston attorney appointed by a Houston court to secure a settlement for investor Princeton Capital Corp., described Paul’s paperwork shuffle to avoid detection and accountability in a report to the 165th District Court in Harris County late last year.
“Paul created hundreds of corporate shells—passing money among them without documentation, corporate formalities, or legitimate purpose,” Kretzer wrote. “Some shells hold a single real estate property. Some hold nothing but are merely paper companies he uses to transfer funds from one entity to another through the guise of ‘contracts,’ or ‘consulting fees.’ To obscure the purposes of these organizations and to conceal and transfer funds, he deliberately created an opaque, complex, and largely undocumented web of corporate shells, with his apex entity, World Class Capital Group, at the top of the pyramid, over all or most the subsidiaries, real estate and accounts, and himself as sole owner of World Class Capital Group.”
By 2018, Paul’s debts exceeded his assets, and investors were filing claims in court, according to Krezter’s report. The Roy F. & Joann Cole Mitte Foundation’s legal fight to disentangle itself from World Class Holdings was one of those claims, and the subject of one of the impeachment charges against Paxton. According to the impeachment resolution approved by the Texas House in May, Paxton disregarded his official duty to protect charitable organizations in the state by instructing his agency staff to intervene on behalf of Nate Paul in the Mitte case against World Class Holdings.
In other impeachment articles, Paxton is accused of fabricating a request for a legal opinion to protect Paul from the potential foreclosure sale of some of his properties. Paxton also is accused of intervening in a public records request dealing with files related to a criminal investigation of Paul. And Paxton is accused of engaging a lawyer, without a proper contract, to issue grand jury subpoenas of financial institutions at odds with Paul.
Eventually, six of Paxton’s top lieutenants were concerned enough to take their concerns to the FBI. The FBI raided Paul’s house and office in 2019. The firing, or marginalizing, of agency whistleblowers was the subject of another article of impeachment.
Paxton’s lawyers, Tony Buzbee and Dan Cogdell, vehemently deny the claims made in the impeachment articles. The Texas Senate is expected to take up Paxton’s impeachment case before Aug. 28, although Buzbee has expressed doubts about giving Paxton a fair trial on that timeline.
The case between Paul and Mitte Foundation is ongoing. As late as April, District Judge Jan Soifer ordered Paul to jail for 10 days on contempt of court charges for lying to the court about money transfers from his accounts. That was after an initial arbitration judgment of $1.9 million against Paul in the Mitte case. Paul’s attorney appealed that sentence to the Texas Supreme Court.