Donor is focus of Paxton complaint
State officials say attorney general was using office to help beleaguered real estate investor
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.
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 hardfought 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 highranking 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 the Chronicle.
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 Thursday.
Neither Paul nor his attorney returned calls or messages left on their voicemail.
Paxton said in a statement Sunday: “The Texas attorney general’s office was referred a case from Travis County regarding allegations of crimes relating to the FBI, other government agencies and individuals. My obligation as attorney general is to conduct an investigation upon such referral. Because employees from my office impeded the investigation and because I knew Nate Paul, I
ultimately decided to hire an outside independent prosecutor to make his own independent determination. Despite the effort by rogue employees and their false allegations, the AG’s office will continue to seek justice in Texas.”
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 the Chronicle.
The official who spoke with the Chronicle said those subpoenas spurred the seven top deputies in the attorney general’s office into action. One of the signatories on the letter accusing Paxton, deputy attorney general for criminal justice J. Mark Penley, filed a motion in state district court in Austin to halt the subpoenas. The motion to “quash” them was granted on Friday, records 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’sOffice said the agency does not have an investigation into Paxton. The FBI and U.S. Attorney’s offices 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,” said Gov. Greg Abbott, who served as attorney general for 12 years prior to Paxton. “I will withhold further comment until the results of any investigation are complete.”
Lt. Gov. Dan Patrick called the matter “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 office in the meantime.
Signs of stress
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 156acre former 3M campus, in northwest Austin, as well as prime downtown parcels. Together with a portfolio of storage facilities 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 selfmade,” 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 GI 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, hemade 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, whomhe met atUT, and actor Leonardo DiCaprio.
In 2018, he donated just under $50,000 to a variety of Republican politicians, Texas Ethics Commission records show.
Effect on criminal case
The recent allegations against 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.
“We were trying to get this case resolved, but if this guy’s out committing crimes while he’s on bond, then it’s going to become an extremely serious matter,” Schaffer said. “I’m not saying that he has — I don’t know the specifics, ( but if he has) then it’s game on.
“Maybe the people that reported him are not shooting straight, but I want to hear from both sides, if possible. We’re going to do what we can to investigate.”
Schaffer said he contacted the Texas Rangers on Saturday immediately upon hearing the news. He declined to comment on whether the agency mentioned any existing investigation on the matter.
Paxton has also been accused by his staff of accepting bribes in the past.
In 2016, Paxton faced allegations of bribery and corruption lodged by an anonymous employee. He was had accepted money for his criminal defense fund from a CEO whose company was being investigated by his office.
While state lawprohibits accepting gifts fromparties subject to the office’s authority, Paxton claimed the donors were “friends,” “family friends” and others with whom he had relationships that were independent of his position as attorney general. A special prosecutor for the Kaufman County district attorney agreed with Paxton’s interpretation and declined to file charges.
The revelations over the weekend appeared to have shaken the agency, where Ryan Bangert, deputy first assistant attorney general and one of the seven officials who reported Paxton to the authorities, sent out a letter of reassurance to staff.
“I write to assure you that the executive team remains committed to serving you, this office and the people of Texas,” Bangert wrote. “Your work, your sacrifice, and your dedication to this office inspire us all.”
Jordan Berry, Paxton’s political adviser, said he resigned after news of the allegations broke.
As news trickled into the political sphere, members of the Texas Legislature began speaking out — among them Houston Republican state Rep. Sarah Davis.
“Although innocent until proven guilty, AG Paxton has been under indictment for the past five years,” Davis said in a tweet Sunday. “With these new allegations of bribery and abuse of office, Paxton needs to quickly address these allegations or resign so he can devote his time to his own personal legal matters.”
Democrats, who are waging an all- out battle to flip the Texas House this November, said the allegations prove Paxton is not fit for office.
“Ken Paxton is the top law enforcement official in the state,” TexasDemocratic Party Chair Gilberto Hinojosa said in a statement Saturday. “Yet, he has proven for years that he cannot follow the law himself.”
Justin Nelson, who ran against Paxton in 2018 and lost by 4 percentage points, on Twitter on Sunday called for Paxton to resign.
Chris Turner, chair of the House Democratic Caucus, echoed that sentiment, saying the “ethical storm clouds” over Paxton’s head had grown “darker andmore ominous than ever.”