AUSTIN — Nate Paul, the real estate developer at the center of new criminal allegations against Texas Attorney General Ken Paxton, has accused several people including a federal judge of orchestrating a vast criminal conspiracy to steal his properties.
Paul requested an investigation into unsubstantiated claims that 11 people, including loan holders, lawyers and a federal bankruptcy judge, are scheming to seize millions of dollars in real estate equity, according to a document The Dallas Morning News obtained Wednesday.
The allegations were apparently passed on to an outside attorney Paxton hired to investigate Paul’s concerns, according to an invoice obtained by The News.
The new details raise more questions about how Paxton allegedly used the resources and power of his position to help Paul, a friend and campaign donor. Paxton personally intervened several times this year in a range of matters that involved or helped Paul — prompting seven senior agency staffers to accuse Paxton of wrongdoing.
It’s unclear how the two men know each other. Paxton has not answered questions about the extent of his connections to Paul, whose company owns properties in Austin, Dallas and Houston, as well as out of state.
“This complaint is regarding a fraudulent financial scheme,” Paul wrote in the undated document, adding that it is an “ongoing conspiracy.”
Paul claimed Austin businessman Bryan Hardeman orchestrated a plan to buy up debt on Paul’s properties and consolidate it into a single bankruptcy case. A court-appointed receiver would then oversee a “rigged auction” of the real estate that would allow Hardeman to profit at least $150 million, Paul alleged. His 10-page complaint is based on information he heard from a loan holder on one of Paul’s properties.
It is not uncommon for investors to purchase debt on properties from lenders and mortgage companies.
Those loan buyers often either attempt to work out a new agreement with the original borrower or take ownership of the property. In the vast majority of foreclosure cases, the note holders end up with control of the property.
Often borrowers who are facing a potential foreclosure by their mortgage holder will file for bankruptcy protection to prevent the properties’ forced sale. It’s then up to the bankruptcy court to work out settlement of the debt with the borrower and their creditors.
Alan Nalle, the loan holder Paul said tipped him off to the alleged conspiracy in September, told The News that Hardeman approached him to sell his share of the debt. He did not say he suspected a conspiracy was afoot.
“I guess you could get there but that seems like a stretch to me,” Nalle told The Associated Press.
An attorney for Gregory Milligan, the court-appointed receiver, called the allegations “ludicrous.”
Tony Davis, the federal judge, declined to comment on the allegations because he is handling a bankruptcy case involving Paul, his clerk said.
Hardeman and the other individuals Paul accused of conspiring against him did not respond to requests for comment. Hardeman denied knowing Milligan or Davis in a deposition taken Oct. 22 in another case, according to a court filing.
Allegations lodged against a federal judge are typically investigated by the FBI, not state officials, said Paul Coggins, former U.S. Attorney for the Northern District of Texas.
Paul’s attorney, Michael Wynne, said he has “significant evidence of the allegations in the complaint,” but did not provide it.
After Paul made the complaint with Travis County District Attorney Margaret Moore’s office, it was referred to the attorney general’s office on Sept. 23. Paxton’s office did not return requests for comment Wednesday.
Paul’s request for an investigation is the second one referred to the attorney general’s office this year. The other, filed in the spring, related to Paul’s allegations that state and federal officers violated his rights when they raided his home and business in 2019.
Paxton’s staff recommended not advancing that investigation after Paul refused to cooperate, they said. Paxton brought on outside attorney Brandon Cammack to continue the inquiry in early September, over objections from senior agency officials.
When Paul filed his second complaint, the Travis County District Attorney’s office sent it straight to Cammack, The Associated Press reported.
According to an invoice The News obtained earlier this month, Cammack performed work on both of Paul’s complaints in September, including transcribing an “Alan Nalle phone recording” and drafting search warrants. Cammack did not return a request for comment Wednesday.
Paxton’s agency dropped the investigation this month after Moore raised questions about the attorney general’s handling of the probe and said she would not prosecute any alleged crimes his agency uncovered.
Top staff have cited this and several other times Paxton intervened in Paul’s legal matters to accuse the attorney general of bribery and abuse of office. Paxton has defended his actions, calling these employees “rogue” and claiming he was safeguarding Paul’s rights.
Real estate editor Steve Brown contributed to this report.
©2020 The Dallas Morning News
Visit The Dallas Morning News at www.dallasnews.com
Distributed by Tribune Content Agency, LLC.