- Key insight: A $68 million-dollar settlement was heavily criticized because it failed to provide any restitution for thousands of victimized borrowers.
- What's at stake: A federal judge questioned why $20 million of the settlement was earmarked to fund increased law enforcement and immigration surveillance within the land development.
- Expert quote: "Once the Biden administration left and the Trump administration came in, I never got a return phone call from the CFPB, the DOJ, AG Paxton's office, nobody. It went dead silent," said Maria Acevedo, a Colony Ridge land purchaser.
A federal judge refused to sign off on a settlement between the Department of Justice and Texas land developer Colony Ridge, repeatedly asking why no monetary relief was provided for victims.
On Friday U.S. District Judge Alfred H. Bennett rejected the Trump administration's
"I thought I was dealing with … folks who had been defrauded, with allegations of above-market interest rates, improper foreclosures," Bennett said. "Now, all of the sudden, I'm being asked to OK increased law enforcement?"
Despite the judge's refusal to sign off on the settlement, the Justice Department said it would proceed without court oversight, using a federal provision that does not require the court's involvement.
Harmeet K. Dhillon, DOJ's assistant attorney general in the civil rights division, voluntarily dismissed the case with prejudice and instead signed an out-of-court agreement with Colony Ridge. The massive land development northeast of Houston has been the subject of federal and state lawsuits alleging the developer intentionally targeted Hispanic consumers, many of them immigrants with no access to credit, with promises of cheap land and high-interest, seller-financed loans.
The consumers who bought parcels of undeveloped land that had no access to sewer, water, or electricity, received no relief.
The judge's refusal to approve the settlement was seen as a significant stand against using civil rights cases for unrelated political priorities, said Sasha Samberg-Champion, special civil rights counsel with the National Fair Housing Alliance, and one of eight nonprofits that
"There's only so much we can do for the poor people involved in this case," said Samberg-Champion. "But it was very important for us to draw a line in the sand that [the DOJ] cannot take existing proceedings and repackage them into ways to pursue unrelated political priorities contrary to civil rights."
During the hearing Bennett grilled a federal prosecutor about the original lawsuit filed in 2023 by the Consumer Financial Protection Bureau that claimed Colony Ridge had engaged in predatory financing and deceptive bait-and-switch land sales. By contrast, the settlement with the DOJ made no mention of predatory financing or compensating harmed consumers and instead earmarked $20 million for immigration enforcement and building a police sub-station in the development.
"The judge was extremely displeased that the DOJ was putting before him a settlement that had no monetary relief for the victims of this fraudulent scheme," said Samberg-Champion, who attended the hearing. "And he certainly wasn't happy with the immigration enforcement provision. He actually asked, 'Whose idea was this?' "
Varda Hussain, a principal deputy chief at the DOJ, said at the hearing that the original idea for setting aside money for police came from the office of Texas Attorney General Ken Paxton, who had filed a lawsuit against Colony Ridge in 2024 for deceptive trade practices, fraudulent marketing and illegal lending practices targeting Hispanic consumers.
Though the Texas AG was not party to the original lawsuit, it settled its case as part of the DOJ settlement with Colony Ridge and also did not require any compensation for victims. Paxton's lawsuit alleged that Colony Ridge misrepresented the conditions of the land to borrowers. Paxton's office did not immediately respond to a request for comment. The DOJ and CFPB also did not immediately respond to a request for comment.
Maria Acevedo, a Colony Ridge land purchaser who filed a legal brief with the U.S. District Court for the Southern District of Texas, said she spoke regularly to the CFPB after the lawsuit was filed.
"Once the Biden administration left and the Trump administration came in, I never got a return phone call from the CFPB, the DOJ, [Texas] AG [Ken] Paxton's office, nobody. It went dead silent," said Acevedo, who attended the hearing with other landowners.
In February, the CFPB officially dismissed its claims against Colony Ridge with prejudice, so the case cannot be refiled. The judge, however, did not seal the case so the aggrieved consumers plan to file a class-action lawsuit, she said.
"The judge repeatedly said at the hearing, not once, not twice, but 10 times: where is the restitution?" said Acevedo. "A lot of people don't understand that what they did to us was a legal scam, it was mail fraud."
