FBI arrests Texas businessman linked to impeachment of state AG Ken Paxton

AUSTIN, Texas -- The FBI on Thursday arrested a businessman at the center of the scandal that led to Texas Attorney General Ken Paxton's historic impeachment, a move that came amid new questions about the men's dealings raised by financial records the Republican's lawyers made public to try to clear him of bribery allegations.

Nate Paul, 36, was taken into custody by federal agents and booked into an Austin jail in the afternoon, according to Travis County Sheriff's Office records. It was not immediately clear what charges led to his arrest, but the records showed he was being held on a federal detainer for a felony.

Paul's arrest followed a yearslong federal investigation into the Austin real estate developer -- a probe Paxton involved his office in, setting off a chain of events that ultimately led to his impeachment last month.

Lawyers for Paul did not immediately respond to requests for comment. One of Paxton's defense attorneys, Dan Cogdell, said he had no additional information on the arrest. The FBI declined to comment, and a spokesman for federal prosecutors in West Texas did not respond to inquiries.

FBI agents examining Paul's troubled real estate empire searched his Austin offices and palatial home in 2019. The next year, seven of Paxton's top deputies reported the attorney general to the FBI on allegations of bribery and abusing his office to help Paul, including by hiring an outside lawyer to examine the developer's claims of wrongdoing by federal agents.

The allegations by Paxton's staff prompted the FBI to investigate, which remains ongoing, and are central to articles of impeachment overwhelmingly approved by the GOP-led state House of Representatives.

On Wednesday, Paxton's defense team showed a packed room of journalists a bank statement that included a 2020 wire transfer purportedly showing him, and not a donor, paying more than $120,000 for a home renovation.

The wire transfer was dated Oct. 1, 2020 -- the same day Paxton's deputies signed a letter informing the head of human resources at the Texas attorney general's office that they had reported Paxton to the FBI.

The $121,000 payment was to Cupertino Builders, whose manager was an associate of Paul, state corporation and court records show.

The company did not incorporate as a business in Texas until more than three weeks after the transaction took place. A company of the same name was formed in Delaware in April of that year, although public filings there do not make clear who is behind it.

Last year, a court-appointed overseer for some of Paul's companies wrote in a report that Cupertino Builders was used for "fraudulent transfers" from his business to Narsimha Raju Sagiraju, who was convicted of fraud in California in 2016. The report described Sagiraju as Paul's "friend."

Paul, who also employed a woman with whom Paxton acknowledged having an extramarital affair, has denied bribing Paxton. In a deposition, Paul described Sagiraju as an "independent contractor" and said he didn't remember how they first met.

The timing of the payment -- and the identity of who was paid for renovations at Paxton's home in Austin -- was not publicly known before his new legal team held a news conference Wednesday in which they put financial documents on a projector screen while criticizing the impeachment. They were first reported by The Wall Street Journal.

Tony Buzbee, a prominent Houston attorney who was hired by Paxton over the weekend and led the news conference, said by email Thursday that receipts "clearly demonstrate" Paxton paid for the repairs. He did not address questions about the timing of the payments or Cupertino Builders.

"Without any evidence the politicians leading this sham impeachment falsely accused General Paxton of not paying for the repairs to his home. That is a lie," Buzbee said.

Since becoming just the third sitting official in Texas history to be impeached, Paxton has attacked the proceedings as politically motivated and rushed, saying he was never given the chance to rebut the accusations in the state House.

"We have the receipts," Buzbee told reporters Wednesday as the documents flashed onscreen. "This is the type of evidence we tried to offer them once we found out this foolishness was going on."

Paxton is temporarily suspended from office pending the outcome of a trial in the Texas Senate that is set to begin no later than Aug. 28. The jury will be the members of the 31-seat Senate; one of them, Paxton's wife, Sen. Angela Paxton, has not said whether she will recuse herself.

The Paxtons purchased the Austin house in 2018. When it was remodeled two years later, Paxton's former staff alleged in court documents, Paul "was involved in" the work.

Among the 20 articles of impeachment are accusations Paxton used the power of his office to help Paul over unproven claims of an elaborate conspiracy to steal $200 million of the developer's properties. The FBI searched Paul's home in 2019, but he has not been charged and his attorneys have denied wrongdoing.

The city has no record of building permits from the time of the renovations. A different Austin contractor -- not Cupertino Builders -- received a federal grand jury subpoena in 2021 for records related to work on Paxton's home that started in January 2020.

Cupertino Builders was formed in October 2020 and dissolved less than two years later, according to Texas corporation records. Its manager was Sagiraju, who said in a deposition for an unrelated case that he did "consulting" work for Paul's business and had an email address with Paul's company.

Sagiraju acknowledged he served prison time for securities fraud and grand theft in California before moving to Austin, according to a transcript of the deposition. He said he was first introduced to Paul by a mutual friend before his prison term and they later did "a few projects" together.

A lawyer for Sagiraju did not immediately respond to requests for comment.

Paxton was separately indicted on securities fraud charges in 2015, though he has not stood trial. ___

Bleiberg reported from Dallas. Associated Press journalists Adam Kealoha Causey in Dallas and Derek Karikari in New York contributed.