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Nate Paul, the Austin real estate developer central to allegations of illegal conduct by Texas Attorney General Ken Paxton, has been ordered to jail again after losing an appeal in a fraud case with a nonprofit.
On Friday, the 3rd Court of Appeals in Austin denied Paul’s appeal to overturn a lower district’s order that he serve 10 days in jail.
The order found him in contempt of court for lying in district court about money transfers he made that exceeded a court-imposed spending limit. While the appeals court agreed with Paul that some of the violations should be struck from the order, it kept in place the lower court’s finding of contempt of court and sent the case back down for the district court to act.
Within hours, state District Judge Jan Soifer in Austin issued an amended order that accused Paul of six violations of law, instead of eight, and ordered him to report to the Travis County Jail by 10 a.m. on April 10 to serve 10 days behind bars.
The court-ordered sanctions against Paul came in a lawsuit between the real estate developer and the Roy F. & Joann Cole Mitte Foundation, an Austin-based nonprofit that sued Paul for fraud after he refused to make financial disclosures about endowment money the nonprofit had invested in his businesses.
Ray Chester, an attorney for the Mitte Foundation, said in a statement his clients were “gratified” by the court's ruling, which was made after the nonprofit tried to collect on $2 million the nonprofit had won against Paul in court.
“Finally, Mr. Paul is going to get some of the punishment he deserves,” Chester said.
Brent Perry, an attorney for Paul, could not immediately be reached for comment. He had argued that Soifer’s order did not apply to Paul’s business accounts and that Soifer should be removed from the case because she was biased against his client.
Paul is central to allegations of corruption made against Paxton by eight of his former top deputies. Those deputies told authorities that Paxton had misused his office to benefit Paul, a friend and donor who had given $25,000 to Paxton in 2018.
Among the allegations was Paxton’s push to get the attorney general’s office involved in the Mitte Foundation’s lawsuit despite never previously showing interest in cases involving charities. In return, the employees said Paul donated to Paxton’s campaigns, helped him remodel his multimillion dollar home and hired Paxton’s alleged mistress. Paxton is married to state Sen. Angela Paxton, R-McKinney.
The eight top deputies who accused Paxton of corruption were fired or resigned, but their reports spurred an FBI investigation into Paxton that is now being led by the U.S. Department of Justice.
No charges have been filed. Both Paul and Paxton have denied the allegations.
Last June, Soifer issued an order that Paul report any spending over $25,000 by him or his businesses that could otherwise be used to pay the $2 million judgment he owed Mitte. The order required Paul to share monthly reports of his spending with the court.
Paul did not submit those reports for five months. In November, a few days before the court would consider Mitte’s request to hold Paul in contempt, Paul filed his first report. But in court, the nonprofit’s lawyers argued that 12 days after Soifer’s order went into effect, Paul had paid $100,000 to Avery Bradley, a former University of Texas at Austin and NBA basketball player who had filed a breach of contract lawsuit against Paul’s firm, World Class Holdings.
When Paul was asked about the payment at the hearing, he said he did not remember it, only to later acknowledge the payment in an amended report to the court, Soifer wrote. She found that payment violated her order because it was not made for “fair value” because Paul did not get anything in return.
Soifer also found that Paul lied about bank statements in court and falsely swore under oath that he had made no payments over $25,000 in violation of her order.
“Mr. Paul’s lies to the court while under oath were pervasive and inexcusable, and served to deliberately thwart the functions of the Court,” Soifer wrote.
The appeals court threw out three other violations for a separate $963,000 payment made by another of Paul’s companies, Westlake Industries, because Soifer had not given Paul “full and unambiguous” notice that he could be held in contempt for those violations.
In her new order, Soifer berated Paul for repeatedly disobeying the court orders in the case and other related lawsuits.
“He has been sanctioned numerous times in the past, and such sanctions have failed to deter Mr. Paul from continued disobedience of court orders and lack of candor with the Court,” she wrote.
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