AUSTIN (KXAN) – Austin real estate investor Nate Paul will not face prison time following the conclusion of a drawn-out legal battle in which the 38-year-old faced a dozen counts of bank and wire fraud that carried, at a maximum, decades in prison.
Eleven of the 12 counts against Paul were dismissed Wednesday. He was ordered to pay $1 million over the next two years. Paul will face four months of home confinement from 7 p.m. to 7 a.m., but he is allowed to go to work during the week and attend other essential appointments.
In an agreement with prosecutors, Paul pleaded guilty in January to one count of making a false statement to a financial institution. At that January hearing, Paul’s defense team said the plea agreement would carry no more than a six-month prison sentence, five years of supervised release and a fine of up to $1 million.
Before approving the plea agreement, U.S. District Judge David Ezra made a lengthy speech explaining his general dislike of binding plea agreements like the one made in Paul’s case. Binding plea agreements require the judge to confine their sentence within the agreed range, Ezra said. If Ezra had rejected the plea agreement, Paul could have also backed out.
In sentencing Paul to zero prison time on the felony count, Ezra said he carefully weighed the implications, and it “was not an easy decision.”
There were many considerations to take into account, he said. Though no financial institution lost money because of the alleged fraud, that did not excuse the crime, he said.
Ezra said he also weighed deterrence of future crimes and the impact that bank fraud could have on a community like Austin, where commercial real estate is a critical business. The judge also alluded to the current national political landscape and its impact on the justice system.
“In this case, there may have been conversations of a presidential pardon,” Ezra said.
Being a convicted felon is “in itself a form of punishment” for a businessman like Paul, Ezra said.
Paul and his attorneys would not comment or answer questions outside the courtroom. Alan Buie, an assistant U.S. attorney handling the case, referred questions to the Department of Justice’s spokesperson.
The government originally sought a judgment of $172 million against Paul, a sum equal to the amount prosecutors said he fraudulently obtained from lenders, according to court records.
Though Paul has been a major player in the Austin real estate industry, he gained widespread recognition because of his alliance with Texas Attorney General Ken Paxton and connection to abuse of office allegations against Paxton that sparked his impeachment.
The beginning of Paul’s federal prison term will mark the end of a legal saga that crumbled his expansive real estate enterprise.
Paul was riding high in 2017. A Forbes article published that year described the then-30-year-old real estate investor – and head of his own company called World Class – as a “prodigy” who had already amassed a portfolio of more than 120 properties valued at over $1.2 billion.
That wave of success soon crested … and crashed. In 2019, the FBI raided Paul’s World Class business headquarters. A series of bankruptcies followed, and, in June 2023, federal authorities arrested and indicted him on eight counts of bank fraud.
The initial indictment accused Paul of making false statements to lending institutions to obtain $172 million in loans for various real estate ventures. Prosecutors detailed repeated occasions in which Paul inflated and falsified the value of his bank accounts to qualify for loans. In one circumstance, for example, prosecutors alleged Paul was seeking a $48 million loan and used a counterfeited document to make it appear to a lender that he had over $18 million in a bank account when, in fact, the account had less than $13,000 in it, according to the indictment.
Prosecutors added four more wire fraud charges in a superseding indictment in November 2023. Those charges alleged that Paul falsely represented that money for limited partnerships would be isolated and kept for use within those limited partnerships. But, prosecutors alleged, he transferred the funds for use in his other business endeavors.
Aside from one count in the superseding indictment, prosecutors dismissed all the charges against Paul.
Paul pleaded guilty to count 10 in the superseding indictment, which alleged he falsely claimed to hold 100% ownership of a company called Silicon Hills Campus, LLC, as part of a $64 million loan agreement made in 2018. Paul actually held just a 9% interest in the company, and a California limited liability company held the remaining 91%, according to court records. Paul used the loan to buy 158 acres and multiple buildings in northwest Austin.
Paul initially pleaded not guilty to all the charges against him, and he assembled a team of heavy-hitting defense attorneys that appeared ready to put the case in front of a jury. Outside the courtroom in February 2024, Paul’s attorney E.G. Morris flatly told KXAN the case “is going to trial.”
But, as both sides worked through a mountain of discovery material, the trial date was repeatedly pushed. Both the defense and prosecutors told the judge they were struggling to wrangle a trove of discovery records that included over 4 million documents and a database with more than 700 bank accounts, according to court filings.
Senior U.S. District Judge David Ezra initially set the case for trial in August 2023. The trial date was later reset to July 2024, then rescheduled again to November 2024 and then, again, to February 2025.
In January, both sides sought yet another trial date reset, but Ezra said he had seen enough. The judge denied a joint motion for continuance on Jan. 8, saying the case had already “gone on way too long,” and “there has to be a point where the court puts its foot down.”
One week later, on Jan. 15, Paul pleaded guilty to one felony count.
While the federal bank fraud case is by far the most serious legal issue Paul has faced, it is his relationship with Paxton that pulled him into the limelight.
In May 2023, the House General Investigating Committee held hearings laying bare its investigation into Paxton and allegations of abuse of office brought to light by whistleblowers in his office. House members in charge of the investigation said they were prompted to initiate the probe after Paxton approached the Legislature seeking approval of more than $3 million to settle a lawsuit brought by the whistleblowers over wrongful termination.
Many of the allegations centered on Paxton’s leveraging the power of his office to assist Paul. Paxton assisted Paul in a lawsuit against a charity called the Mitte Foundation and hired an outside attorney to help Paul, the committee alleged.
Paxton fought every step of the way, casting himself as the victim of a corrupt attempt to oust him and defy the will of Texas voters. He was impeached by the House, then tried and acquitted on all articles of impeachment by the state senate in September 2023.
Separate from Paul’s federal case, he also faced legal trouble in the Mitte Foundation civil case.
The Mitte Foundation case took years to resolve and centered on millions of dollars the foundation invested in Paul’s companies and sought to recover years later. In February 2021, an arbitrator awarded the Mitte Foundation $1.9 million in damages, according to court records.
During the course of that civil litigation, Travis County District Judge Jan Soifer found Paul in criminal contempt of court in March 2023 for perjury and violating an injunction that required him to report financial transfers over $25,000, court records show. Soifer ordered Paul to jail for 10 days, a sentence he ultimately served last November, after a year and a half of appeals at all levels of the court system failed to stop it.
