Nate Paul Loses Battle for Trophy Assets

Nate Paul has lost a lawsuit regarding World Class Holdings’ trophy assets that were sold in foreclosure.

Travis County Judge Catherine Mauzy has dismissed the embattled real estate CEO’s claims against California-based Karlin Real Estate and Austin-based Pennybacker Capital, regarding several sites that were wrestled away from Paul, including the 156-acre former 3M office campus in northwest Austin, the Austin Business Journal reported.

The lawsuit, filed in June 2021, alleged that Karlin and Pennybacker had disregarded foreclosure procedures and manipulated the sales prices of multiple properties they acquired at an auction that year. The judge ruled against World Class Holdings’ allegations of a concerted effort to “steal” properties from the firm, finding them not credible.

Paul is expected to appeal, said Jonathan Pelayo, Karlin’s lawyer.

A crucial aspect of Pelayo’s defense was a video of the June 2021 auction, held outside the Travis County Courthouse. The video depicted a chaotic scene with protestors, allegedly staged by Paul, who disrupted the foreclosure auction with whistles, shouts and chants. The protestors’ cries included demands for pizza and allegations that the trustees were foreclosing on people’s homes, although the properties in question were commercial, not residential.

The ruling is another blow to Paul, who’s been grappling with mounting lawsuits, bankruptcies and foreclosures since the FBI raided the offices of World Class Holdings in 2019. Paul was also at the center of Texas Attorney General Ken Paxton’s impeachment trial. Paxton had been accused of accepting bribes from Paul in exchange for legal favors.

World Class Holdings acquired the former 3M campus, near the intersection of RM 2222 and RM 620, in 2017 but defaulted on its loan in 2019. Karlin acquired that debt and won auctions for the campus and other properties, including two historic landmarks in downtown Austin, the Phillips Building at 103 East Fifth Street and the Koppel Building at 320 Congress Avenue.

Pennybacker also acquired two properties at the auction, including the historic Hirshfeld-Moore House at 303 West Ninth Street, the outlet said.

Karlin’s ambitious plans for the former 3M campus, now known as Highpoint 2222, include extensive renovations that could cost hundreds of millions of dollars. The project encompasses interior and exterior demolition, the installation of a glass curtain wall system, and creating a 58,000-square-foot amenity hub. Highpoint 2222 will also feature underground tunnels connecting the modern corporate megacampus campus with an on-site utility plant.

—Quinn Donoghue