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Austin businessman Nate Paul tied to Texas AG Ken Paxton complaint

Austin American-Statesman logo Austin American-Statesman 10/5/2020 Tony Plohetski
a man wearing glasses and looking at the camera: Nate Paul is the founder of World Class Holdings. Some properties he controls in Austin were the scene of FBI operations last year. [CONTRIBUTED PHOTO] © Provided by Austin American-Statesman Nate Paul is the founder of World Class Holdings. Some properties he controls in Austin were the scene of FBI operations last year. [CONTRIBUTED PHOTO]

A criminal complaint against Texas Attorney General Ken Paxton from seven top aides stems from his relationship and dealings with an Austin-based businessman under investigation for more than a year by the FBI, the American-Statesman confirmed Sunday.

A text message the executives sent Paxton on Thursday said that they had alerted law enforcement "concerning your relationship and activities with Nate Paul."

Paul, who has amassed a portfolio of high-profile real estate holdings in Austin and elsewhere over the past 13 years, became the subject of an FBI investigation in 2019, when FBI agents raided his home and office.

The aides asked Paxton to meet with them, but he responded via text message that he received their request "on very short notice. I am happy as always to address any issues or concerns. Please email me with those issues so that they can be fully addressed."

Documents obtained by the American-Statesman on Sunday show that Paxton's office had been investigating claims Paul made this summer that FBI agents conducted raids on parts of his properties without proper search warrants in possible violation of federal law.

Ken Paxton wearing a suit and tie: Members of Texas Attorney General Ken Paxton's staff have asked for an investigation of their boss. [JAY JANNER/AMERICAN-STATESMAN] © Jay Janner Members of Texas Attorney General Ken Paxton's staff have asked for an investigation of their boss. [JAY JANNER/AMERICAN-STATESMAN]

The revelations come a day after the Statesman revealed that attorney general office executives, including Paxton's first assistant, asked federal agents to investigate their boss for potential crimes that include bribery and abuse of office.

Their one-page letter to the state agency's human resources department did not name Paul.

Neither Paul nor his attorney could be reached for comment.

The nature of the relationship between Paul and Paxton remains unclear.

In August 2019, agents from the FBI and U.S. Department of the Treasury conducted searches of Paul-controlled properties in Austin, including one of his downtown headquarters in the Hirshfeld-Moore building at Ninth and Lavaca streets, seizing folders and other materials.

The U.S. attorney's office and other authorities have declined to comment on the searches, and no charges have been filed.

But real estate entities involving Paul's World Class Properties have filed for bankruptcy in the wake of the searches, amid numerous loan defaults and efforts by creditors to foreclose on them.

According to court filings, 16 bankruptcies by Paul-controlled entities have been filed since November 2019 and are pending, including the entity that owns the former 3M campus and the one that owns Paul's Hirshfeld-Moore headquarters.

In addition, Paul has frequently been embroiled in lawsuits over the years. Some cases have been settled out of court, but one, involving the Roy F. and Joann Cole Mitte Foundation, continues to play out.

The foundation, an Austin-based nonprofit that provides grants to charitable organizations and academic scholarships for students with financial needs, is a limited partner in a pair of Austin real estate entities formed by World Class, one of which owns prime waterfront property at East Cesar Chavez and Trinity streets.

The long-running legal battle over the partnerships — named WC 1st and Trinity LP and WC 3rd and Congress LP, based on the locations of properties they own — began in December 2018, when the Mitte Foundation sued to gain access to more financial information about its investments in them. But it since has evolved into a fight over disposition of the assets.

According to court filings, the Mitte Foundation has a minority interest in both partnerships, with an estimated 6% stake in WC 1st and Trinity and 16% stake in WC 3rd and Congress.

Other legal battles in which Paul has been involved include a 2014 lawsuit against him by former employees of a rooftop club he owns in downtown Austin, who said they were cheated out of their tips.

It was settled out of court, as was a 2016 lawsuit by Texas investor Michael Macs, who accused Paul of fraud, breach of contract and misrepresentation in connection with Macs' investments of nearly $15 million in real estate ventures in Texas, Indiana and California.

In Austin, World Class owns several shopping centers, including Arboretum Crossing, which the company bought last year.

In addition, it has purchased downtown sites that once housed the Spaghetti Warehouse, Katz's Deli, La Zona Rosa and Carmelo's Italian Restaurant, as well as the IHOP property near Rainey Street.

Paul has said in various news releases that his company also owns shopping centers in Houston, San Antonio, Dallas, Chicago, Kansas City, Oklahoma City, Des Moines, St. Louis, New Orleans and Denver.

Combined, World Class development sites have approvals to build more than 75 million square feet in high-growth markets nationwide, a World Class release said last year.

Meanwhile, Paxton remains under an indictment on charges of security laws violations relating to private business deals in 2011 and 2012 in Collin County.

American-Statesman staff writers Ryan Autullo, Chuck Lindell, Bob Sechler and Shonda Novak contributed to this report.

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