FBI arrests Texas businessman linked to Texas AG impeachment

AUSTIN, Texas >> FBI agents on Thursday arrested a businessman at the center of the scandal that led to the historic impeachment of Texas Attorney General Ken Paxton, a day after his defense presented evidence that was intended to counter bribery allegations but raised new questions about the two men’s dealings.

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

Lawyers for Paul and the U.S. Attorney’s Office in West Texas did not immediately respond to requests for comment. The FBI declined to comment, and a lawyer for Paxton, Dan Cogdell, said he had no additional information about Paul’s arrest.

Paul’s entanglements with Paxton were central to the GOP-led state House of Representatives’ overwhelming vote to impeach the Republican last month.

Paul’s troubled real estate empire has been the focus of federal scrutiny for years, and agents searched his Austin offices and palatial home in 2019.

The next year, Paxton involved his office in the federal case, a move that prompted his top staff to report him to the FBI.

Their allegations of bribery and abuse of office by Paxton prompted separate FBI investigation of the attorney general, which remains ongoing.

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 one a donor, paying more than $120,000 for a home renovation.

The wire transfer was dated Oct. 1, 2020 — the same day seven of Paxton’s top 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 over accusations of bribery, abuse of office and improper influence.

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 Paul’s 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 in which they put financial documents on a projector screen while calling the impeachment a sham. 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 Texas House of Representatives.

“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 31 state senators including Paxton’s wife, Sen. Angela Paxton, who 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 that 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 that 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.

Lawyers for Paul and Sagiraju did not immediately respond to requests for comment. Paxton has been under FBI investigation for years and was separately indicted on securities fraud charges in 2015, though he has yet to stand trial. ——— Bleiberg reported from Dallas. Associated Press journalists Adam Kealoha Causey in Dallas and Derek Karikari in New York contributed.