Attorney General Ken Paxton on Tuesday accused the developers aligned with the Muslim-centric EPIC City project of violating federal and state securities laws.
In a statement, Paxton asserted the developers committed “both procedural violations and fraudulent conduct” in a letter to two members of the Texas State Securities Board Tuesday, but didn’t specifically identify the violations.
Paxton indicated he was interested in a lawsuit against the group, pending a referral from the Texas State Securities Board. His office did not immediately respond to phone and email requests for comment.
Representatives for Community Capital Partners LP, the for-profit entity behind the EPIC City project, did not immediately respond to questions before publication.
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EPIC City is a planned Muslim-centric development of more than 1,000 homes, a K-12 faith-based school, a mosque, elderly and assisted living, apartments, clinics, retail shops, a community college and sports fields ― all just outside the town of Josephine, about 40 minutes northeast of downtown Dallas.
As part of its investigation into potential violations of the Texas Securities Act, Paxton’s office requested information related to “offerings of securities” of Community Capital Partners LP.
How EPIC City works
Community Capital Partners was formed by some members of the East Plano Islamic Center, one of North Texas’ largest mosques.
Imran Chaudhary, Community Capital Partners executive officer and director, previously told The Dallas Morning News that the mosque will receive any and all profits from the development.
To reserve lots in EPIC City, investors must buy an $80,000 share of Community Capital Partners — money that will be credited to the purchase of a home lot.
EPIC City investors must be classified as accredited under U.S. Securities and Exchange Commission guidelines. Along with other requirements, that means they must have a net worth of over $1 million ― and individual income of $300,000, or a household income of $300,000 over a period of time, according to documents published on the group’s website.
Investments help Community Capital Partners cover the cost of the land purchase and the project’s development of roads.
If the organization doesn‘t develop EPIC City, the land will be sold and investors will be refunded, according to investor documents.
The group provided over 750 documents along with written responses to Paxton’s office as part of the probe, according to Paxton’s letter.
‘Bad actors’
In March, Paxton issued a civil investigative demand to Community Capital Partners “to acquire material relevant to an investigation regarding potential violations of Texas consumer protection laws.”
“The bad actors behind this illegal scheme must be held accountable for ignoring state and federal regulations,” Paxton said Tuesday.
“In accordance with state law, the TSSB should review our findings and refer this matter to me for further legal action.”
Two other investigations tied to the development have ended. The Texas Workforce Commission settled a Fair Housing Act complaint against the community, which Gov. Greg Abbott had previously said may be discriminating based on religion, in September.
Separately, the U.S. Department of Justice ended a civil rights investigation against the development in June.
Abbott previously said a dozen state agencies are investigating “potential illegal activities conducted by EPIC and its affiliated entities.”
In September, the governor ceremonially signed a law that he said had banned “Sharia compounds,” and which targeted the business structure behind EPIC City.
Abbott alleged the developers were violating religious freedom laws by trying to use religion as a form of “segregation.”
At the time, Dan Cogdell, an attorney representing the EPIC mosque and EPIC City developers, has accused Abbott of “gubernatorial hate speech.” Cogdell insisted his clients are “law-abiding Texans, law-abiding Americans and law-abiding Muslims.”