Court documents show friendly relationship between Texas Attorney General Ken Paxton and Nate Paul, donor at the center of new criminal allegations

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A new deposition sheds light on the still-murky relationship between Texas Attorney General Ken Paxton and real estate investor Nate Paul, a friend and political donor at the center of new criminal allegations against the state’s top lawyer.

Little is known about how the two met and how closely they know each other. But eight senior aides told law enforcement they believed that actions Paxton took at the agency, on Paul’s behalf, violated the law.

Paxton has called the whistleblowers “rogue employees” and denied their allegations as “false.”

In a transcript of the deposition obtained by The Texas Tribune on Wednesday, Paul said that he could not recall exactly when he met Paxton but that it was “several years ago.”

Paul said he considers “the relationship, you know, positive,” when asked by a lawyer in the deposition whether they were friends.

The two sometimes ate lunch together, but Paul could not say how many times, he said in the deposition. He also said they had been in touch recently, when he offered condolences to Paxton, whose mother died in late October.

Paul did not answer several questions during the hourslong deposition, which came as part of a legal dispute between Paul and the Roy F. and Joann Cole Mitte Foundation, an Austin-based nonprofit that provides grants to charitable organizations and academic scholarships for financially needy students. The nonprofit sued Paul’s firm in 2018, claiming he wasn’t sharing financial information about jointly owned investments managed by his businesses.

Paxton’s office took the unusual step of intervening in that lawsuit this summer, but reversed its decision shortly before the senior aides’ complaints were made public.

“Have you provided any free services for him, like let him stay in one of your homes or had his — had his family member or someone important to him on your payroll, anything like that?” asked Ray Chester, one of the attorneys representing the nonprofit suing Paul.

“No, not that I can recall,” Paul said in the deposition.

Paul said he could not recall giving Paxton anything other than a campaign contribution of $25,000 in 2018. Paxton received several larger political donations the same year as he ran for reelection.

But Paul said he employed a woman as a project manager at his firm who was recommended by Paxton. He said he did not employ her as a favor to Paxton. Paul did not say in the deposition when she was hired.

Paul said he could not recall whether he received Paxton’s recommendation for the woman before he met her himself, according to the deposition, and said he did not know how Paxton and the woman knew each other.

The woman Paul hired was involved in a romantic, extramarital relationship with Paxton, two people told the Tribune on Wednesday. Both of these people, who requested anonymity for fear of repercussions, were told directly about the relationship by Paxton himself in 2018.

The Dallas Morning News and the Associated Press first reported the affair Thursday.

Paxton, a second-term Republican, acknowledged the affair in 2018 to senior staff in a meeting, according to one of the people who confirmed the relationship to the Tribune, who attended the meeting. Paxton told them he was ending the relationship and recommitting to his marriage, the person said. It is not clear when the affair began.

Spokespeople for Paxton did not return requests for comment about his relationship with the woman or with Paul.

Paxton’s wife, Republican state Sen. Angela Paxton, represents parts of North Texas. Her office did not respond to a request for comment.

The woman is a former aide to a Texas senator. Multiple attempts to reach her were not successful.

An unusual intervention

The agency handles tens of thousands of cases a year, so it was highly unusual that Paxton took such a close interest in so many low-profile matters tied to Paul, according to former agency staff and legal experts.

Paul’s attorney, Michael Wynne, did not respond to several questions from the Tribune, including inquiries about the nature of the investigation at the attorney general’s office. A spokesperson for Paxton said the agency is investigating some of the whistleblowers who reported Paxton to law enforcement for “making false representations to the court, illegally leaking grand jury materials, and violating numerous agency policies” but did not provide further details.

The attorneys also asked Paul about some of the legal matters in which actions of the attorney general’s office have benefited Paul.

The Austin American-Statesman reported that Paul faced foreclosure on a number of properties this summer — but that the foreclosure sales didn’t take place after Paxton rushed a legal opinion that made it harder for such sales to proceed.

“Are you familiar with the opinion letter issued by the attorney general’s office regarding foreclosures that was issued this summer?” Chester asked.

“Which specific one?” Paul asked.

“The one that you asked him to write, that one,” Chester replied.

Paul did not dispute the characterization that he’d asked Paxton to write the opinion letter, but said “you have to show me which document you’re referring to.”

The Texas attorney general’s office is notified, by law, of lawsuits involving charities and has the ability to intervene in the suits to protect the public interest in charity.

So it was routine that the attorney general's office was alerted to the lawsuit. But it was not typical that it chose to intervene, according to court documents and legal experts.

Over the period spanning Oct. 1, 2019, to Oct. 1, 2020, about 130 cases were brought to the attention of the attorney general’s office through the normal process for notifying the agency of litigation involving charities.

The agency took up just two of the cases, according to court records. One was the Mitte Foundation litigation involving Paul.

Initially, the attorney general’s office declined to get involved. But after Paul’s company reached out to the agency, it reversed its decision in June 2020.

Emails obtained by The Texas Tribune show Paxton was personally involved in the litigation and even communicated with Paul and his attorney to help schedule a time for mediation.

“I spoke with AG on this as well,” Paul wrote in a July 6 email to his partners on the case.

Less than an hour later, Paul’s then-attorney, Terry Scarborough, said he had spoken with the state’s top lawyer, too.

“By the way, General Paxton just called me and I already told him this,” Scarborough wrote to Godbey.

According to The Dallas Morning News, Paxton was even prepared to go to court himself to argue the case before aides talked him out of it.

Paxton’s involvement in the case was not just unusual, but unethical, said Shane Phelps, who worked in the attorney general’s office under Dan Morales and was deputy attorney general for criminal justice under former attorney general John Cornyn.

“The only reason an AG would get involved in a case like that, if they were not minding their ethics P’s and Q’s, would be because they’ve got a donor who’s got an interest in it,” Phelps said. “If they have a donor who has an interest in a case, any ethical and appropriate attorney general is gonna say, ‘I can’t do that’ and is not gonna do it.”

Joshua Godbey, a division chief at the agency, was put in charge of the case, an atypical choice because of his seniority, agency records show.

The role put Godbey on the receiving end of repeated haranguing emails from Paul, who accused him of “backing out of things you agreed to do,” of “cowering,” of being “biased,” and of “highly unprofessional behavior.”

In September, around the time top aides alerted law enforcement authorities to alleged criminal behavior by Paxton, the attorney general’s office reversed itself again and stepped away from the ongoing case.

Despite that apparent distancing, the attorney general’s office was mentioned numerous times, and a top aide there was consulted, during the deposition this week. Paxton was mentioned repeatedly in both a personal and professional capacity, including when Wynne, Paul’s attorney, called a top Paxton deputy at the agency during a break in the deposition.

“I would rather my client not disobey a direct order from the first assistant here,” Wynne said. “So I’m going to instruct him not to answer these questions.”

That top deputy, Brent Webster, later responded to say the office was “fully asserting attorney work product privilege … and any other related privileges,” according to a copy of Webster’s email shown during a Nov. 5 court hearing.