Nate Paul, the businessman at the center of Ken Paxton’s impeachment, was charged Friday with eight felony counts of making false statements to mortgage lending institutions and other financial institutions.
The charges were read by U.S. Magistrate Judge Dustin Howell a day after Paul was arrested in Travis County.
Paul appeared in the courtroom around 10:55 a.m. wearing a light blue shirt and blue jeans, and in handcuffs.
He’s accused of making false statements to financial institutions in New York, California, Connecticut, and Ireland. According to the indictment, he lied about his liabilities and cash.
For instance, on March 2017, Paul "knowingly made a false statement and report for the purpose of influencing the action" of a credit union. Paul allegedly reported having $31.6 million in cash while knowing the account referenced actually contained less than $500,000.
In another instance, on December 2017, Paul reported owing $3,422,056 in "Total liabilities."
"In fact, however, as Paul knew, he owed on November 30, 2017, directly or indirectly, at least $28,620,000 in addition to the liabilities he disclosed," the indictment said.
This is the conclusion of a federal investigation that has been ongoing for years.
Paul will be allowed to travel in Texas unrestricted, but must provide notice if traveling out of state. He is prohibited from traveling abroad, and Paul's attorneys said he has surrendered his passport.
Paul is a key figure in Ken Paxton’s impeachment.
Most of the 20 articles of impeachment against the suspended Republican attorney general are related to his relationship with Paul, a political donor.
According to Texas House investigators, Paxton used his office to intervene in a federal investigation against Paul and even asked his staff to change a COVID-19 legal opinion to benefit Paul.
In a statement, Tony Buzbee, Paxton's attorney, denied Paul's indictment is connected to his client.
“The charges against Paul evidently have nothing to do with Attorney General Ken Paxton," Buzbee said. "That should speak volumes as to how weak this impeachment effort is.”
Earlier this week Paxton's attorneys said they are preparing for a lengthy trial in the Texas Senate.
In addition to a state Senate trial that will determine whether Paxton can stay in office, the FBI is reportedly investigating him for corruption.
Paxton’s impeachment lawyers have told multiple media outlets they believe the feds want to “flip” Paul – in other words, trade leniency for Paul in exchange for information and/or testimony in the Paxton investigation.
Paul Coggins, who served as U.S. Attorney for for the Northern District of Texas during the Clinton administration, said in public corruption cases, prosecutors certainly want multiple people on the inside to testify about any scheme.
“Both as a defense lawyer and as a prosecutor, I’ve seen fathers turn on sons, I’ve seen best friends turn on each other, I’ve seen husbands turn on wives,” Coggins said. “Just the fact that people may be in a scheme together doesn’t mean they’re going to hang together when they’re facing the prospect of many many years in prison.”
One of Paxton’s defense attorneys in the impeachment trial, Dan Cogdell, implied in the Houston Chronicle that testimony from a flipped witness may not be reliable.
“Sometimes people cooperate and say things that are true; sometimes people cooperate and say things that are untrue to lessen their exposure,” Cogdell said.
Lying to federal law enforcement, however, comes with significant risk, Coggins said.
“False statement to a federal official in an investigation is a 5-year federal felony,” he said. Anyone who does that would be “exposing themselves to even more time.”
KERA's Bret Jaspers contributed to this report.
