Nate Paul, Investor Linked to Ken Paxton’s Impeachment, Faces Charges

Federal prosecutors have brought charges of making false statements to financial institutions against the businessman at the center of the allegations swirling around Ken Paxton, the impeached attorney general of Texas.

The man — Nate Paul, a real estate investor in Austin and a donor to Mr. Paxton’s campaign — appeared before a magistrate judge for 30 minutes on Friday morning, wearing a blue shirt, faded jeans and sneakers. He did not enter a plea, and was allowed to go home after the hearing.

Prosecutors accused Mr. Paul of exaggerating the value of his assets, telling mortgage companies and credit unions that he had more money that he actually did.

Mr. Paul was arrested Thursday afternoon by the Travis County Sheriff’s Office on behalf of the Federal Bureau of Investigation, according to jail records.

He became a focus of the impeachment proceedings against Mr. Paxton last month. A majority of the Texas House of Representatives concluded that Mr. Paxton should stand trial in the State Senate on charges that included taking what amounted to bribes, disregarding his official duty, obstructing justice and abusing the public trust.

Many of the charges focused on assertions that Mr. Paxton had used his office to benefit Mr. Paul, who had given $25,000 in political contributions to Mr. Paxton’s campaign.

Mr. Paul has had legal troubles at least since 2019, when F.B.I. agents raided his 9,175-square-foot home and his downtown offices in connection with an inquiry whose specifics they declined to disclose. Investigators for a Texas House committee revealed last month that Mr. Paul had asked his friend Mr. Paxton to help him learn more about that federal investigation, a request that may have violated the state’s public records laws. And since the F.B.I. raid, Mr. Paul has been embroiled in a number of lawsuits and bankruptcy proceedings.

Mr. Paul has denied any wrongdoing in the case, and has said the F.B.I. raid was unjustified and unlawful.

Mr. Paul’s appeal for help from Mr. Paxton is the aspect of the case that has attracted the most scrutiny. Investigators and whistle-blowers who spoke up about what they perceived to be abuse of power in the attorney general’s office said that Mr. Paxton arranged a meeting between Mr. Paul and the local district attorney’s office, and later appointed a special prosecutor to look into Mr. Paul’s allegations about law enforcement abuses, even though members of Mr. Paxton’s staff raised concerns that those actions might violate the rules of the office.

It also emerged that Mr. Paxton had recommended to Mr. Paul that he hire a woman with whom Mr. Paxton was having an extramarital affair, and that Mr. Paul’s company had later hired the woman as a project manager.

In March, Mr. Paul narrowly avoided spending 10 days in jail for contempt of court in a civil fraud case filed by an Austin nonprofit group that had invested in one of his enterprises.

Mr. Paul was once a rising star in the booming Texas real estate industry, both in the state capital and beyond. In 2017, when he was 30 years old, Forbes called him a “real estate prodigy.” The publication estimated that the company he founded, World Class Holdings, owned $1.2 billion in real estate assets, a remarkable achievement for a young investor who at some point had amassed 10 million square feet of commercial space, including a large inventory of self-storage facilities, according to Forbes. His holdings expanded to include properties in at least 17 states from California to New York.

The various investigations into Mr. Paul have been accompanied by financial setbacks for him. According to The Austin Business Journal, at least 18 entities connected to World Class Holdings have filed for bankruptcy protection in recent years.

Kitty Bennett contributed research.