Embattled Texas Developer Nate Paul Faces ‘Imminent’ 10-Day Jail Sentence
Nearly a year after Nate Paul was hit with additional wire fraud charges, the troubled Austin-based real estate developer is exhausting all remedies to avoid an “imminent” 10-day jail sentence related to a civil case.
Paul, CEO of World Class Capital, faces 12 federal counts of loan and wire fraud for allegedly making misleading and false statements to obtain money for other businesses and property purchases. Those charges emerged last summer, along with details about Paul’s alleged inappropriate relationship with Texas Attorney General Ken Paxton.
But Paul is also looking at a contempt of court charge related to a civil battle between World Class Capital and the nonprofit Mitte Foundation, KXAN reported.
Travis County District Judge Jan Soifer in March 2023 sentenced Paul to 10 days in jail for contempt in that dispute. Since then, Paul has used practically every legal maneuver possible to avoid the sentence, and the U.S. Supreme Court denied a petition to review the case on Oct. 15.
Paul filed another petition for a writ of habeas corpus, or a challenge to the validity of his sentence, in federal district court on Tuesday, a last-ditch attempt to avoid time behind bars.
“Since the denial of the [Supeme Court] petition, the Mitte Foundation has filed a motion with the Texas Supreme Court to lift the stay, meaning that Mr. Paul’s 10-day jail sentence is imminent,” Paul’s newest federal petition says, according to KXAN.
The Mitte Foundation invested in World Class in 2011 but sued the company in 2018 when World Class allegedly refused to disclose financial information. The parties reached an agreement in 2019 that called for World Class to purchase Mitte’s interest in the limited partnerships for $10.5M, according to court documents. Then, the FBI raided World Class Entities’ offices and Paul’s residence in 2019, putting his $1B real estate portfolio in distress.
The raid came four days before World Class Entities’ payment to Mitte was due, leading World Class Entities to inform Mitte that no payment would be made. Mitte sued again and arbitration continued, court records show.
Soifer sentenced Paul to jail time after finding he violated a court injunction by failing to report transfers over $25K and committing perjury, KXAN reported, citing court records.
Paul’s newest petition “appears to be a last gasp attempt to delay the inevitable,” a Mitte Foundation attorney told KXAN in a statement.
The FBI arrested Paul on eight felony charges in early June 2023, just days after the Texas House of Representatives voted to impeach Paxton for claims including misuse of his office to benefit Paul. Paxton was acquitted in September.
Paul was hit with four more charges in November, with a trial scheduled for February. The combined charges include one count of conspiracy to commit wire fraud, three counts of wire fraud and eight counts of making false statements to obtain about $172M in loans to purchase properties.
But Paul is also using legal maneuvers to try to get the federal charges dismissed, according to KXAN. An Oct. 9 dismissal request argues that his indictment for the 12 federal charges fails “to allege that Mr. Paul acted ‘willfully.’”
He has also filed a motion requesting that his wire fraud and bank fraud charges be separated since they weren't part of the same transaction or a common scheme, KXAN reported.
“Unless these counts are severed, Mr. Paul will inevitably suffer undue prejudice,” the filing says.
U.S. District Judge David Ezra scheduled Paul’s trial to start jury selection Feb. 18, settling in the middle of the prosecution’s and defense’s requested start dates of Jan. 6 and March 17, respectively.
Although the trial had already been delayed twice, the defense said it needed time to review 4.4 million documents in the case.
