The FBI arrested a businessman at the heart of the scandal that led to Texas Attorney General Ken Paxton’s historic impeachment on Thursday, raising new questions about the men’s dealings raised by financial records made public by the Republican’s lawyers in an attempt to clear him of bribery allegations.
According to Travis County Sheriff’s Office records, Nate Paul, 36, was arrested by federal investigators and lodged into an Austin jail in the afternoon. It was unclear what charges had led to his detention, but records revealed he was being detained on a federal detainer for a felony.
Paul’s arrest came after a years-long federal investigation into the Austin real estate developer, which Paxton got engaged in, setting off a chain of events that led to his impeachment last month.
Paul’s lawyers did not reply quickly to calls for comment. Dan Cogdell, one of Paxton’s defense attorneys, said he had no further information about the arrest. The FBI declined to comment, and a spokeswoman for West Texas federal prosecutors did not reply to requests.
In 2019, FBI officials investigating Paul’s failing real estate empire investigated his Austin offices and lavish house. The next year, seven of Paxton’s top deputies reported him to the FBI on suspicions of bribery and abusing his power to benefit Paul, including hiring an outside counsel to investigate the developer’s claims of wrongdoing by federal investigators.
The charges made by Paxton’s staff spurred the FBI to conduct an investigation, which is still ongoing, and are essential to articles of impeachment authorized by the state House of Representatives, which is run by Republicans.
On Wednesday, Paxton’s defense team presented a bank statement to a crowded room of journalists that included a 2020 wire transfer reportedly showing him, rather than a donor, paying more than $120,000 for a house repair.
The wire transfer was made on Oct. 1, 2020, the same day Paxton’s deputies signed a letter telling the Texas attorney general’s office’s head of human resources that they had reported Paxton to the FBI.
According to state company and court records, the $121,000 payment was made to Cupertino Builders, whose manager was a Paul associate.
The company did not register as a corporation in Texas until more than three weeks after the transaction. In April of that year, a business with the same name was founded in Delaware, however official documents there do not reveal who is behind it.
Cupertino Builders was used for “fraudulent transfers” from Paul’s business to Narsimha Raju Sagiraju, who was convicted of fraud in California last year, according to a court-appointed overseer for several of Paul’s companies last year. According to the report, Sagiraju is Paul’s “friend.”
Paul has denied bribing Paxton and also employed a lady with whom Paxton admitted having an adulterous affair. Paul described Sagiraju as a “independent contractor” in a deposition and said he didn’t remember how they initially met.
The timing of the payment — and who was paid for repairs at Paxton’s home in Austin — were unknown to the public until his new legal team conducted a news conference Wednesday, displaying financial records on a projection screen while condemning the impeachment. The Wall Street Journal broke the news first.
Tony Buzbee, a prominent Houston lawyer recruited by Paxton over the weekend and who led the news conference, claimed in an email Thursday that receipts “clearly demonstrate” Paxton paid for the repairs. He did not respond to inquiries about the payment schedule 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 only the third sitting official in Texas history to be impeached, Paxton has characterized the proceedings as politically driven and hurried, claiming he was never given the opportunity to defend himself 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 has been suspended from office indefinitely until the conclusion of a trial in the Texas Senate, which is slated to begin no later than Aug. 28. Members of the 31-member Senate will serve on the jury; one of them, Paxton’s wife, Sen. Angela Paxton, has not announced whether she will recuse herself.
The Paxtons bought the Austin home in 2018. Paxton’s former staff said in court records that Paul “was involved in” the remodeling two years later.
Among the 20 articles of impeachment are allegations that Paxton exploited his office’s power to aid Paul in his pursuit of unverified claims of an intricate plot to steal $200 million from the developer’s properties. The FBI conducted a search of Paul’s home in 2019, but he has not been prosecuted, and his attorneys have denied any wrongdoing.
The city has no record of building permits from the renovation period. In 2021, a separate Austin contractor — not Cupertino Builders — was served with a federal grand jury subpoena for papers relating to work on Paxton’s home that began 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.
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 yet to stand trial.