{"id":242312,"date":"2026-04-09T17:46:11","date_gmt":"2026-04-09T17:46:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-tx\/242312\/"},"modified":"2026-04-09T17:46:11","modified_gmt":"2026-04-09T17:46:11","slug":"trumps-doj-plans-to-settle-colony-ridge-case-without-compensating-victims","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-tx\/242312\/","title":{"rendered":"Trump\u2019s DOJ plans to settle Colony Ridge case without compensating victims"},"content":{"rendered":"

This article is co-published with ProPublica, a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica\u2019s Big Story newsletter<\/a> to receive stories like this one in your inbox as soon as they are published.<\/p>\n

In December 2023, the U.S. Justice Department sued a Texas land developer it accused of duping tens of thousands of Hispanic residents into predatory mortgages, a landmark case for the Biden administration.<\/p>\n

Colony Ridge, which sold plots in massive subdivisions north of Houston, had become a \u201cone-stop shop for discriminatory lending,\u201d Kristen Clarke, assistant attorney general for civil rights, said at a news conference announcing the lawsuit. The developer targeted Hispanic applicants through false advertising and persuaded them to take out high-interest loans that many could not afford, then benefited when it foreclosed on their properties, the lawsuit alleged.<\/p>\n

\u201cOur goal at the end of the day is to ensure that victims are compensated for their loss,\u201d Clarke declared.<\/p>\n

Three years later, the Trump administration and Colony Ridge are on the verge of resolving the case. But the $68 million proposed settlement provides no money for victims of the alleged scheme. Instead, it sets aside $20 million for policing and immigration enforcement \u2014 a provision that may be used to target the very people who were victimized by the developer, according to former government officials who worked on such cases.<\/p>\n

\u201cI\u2019ve never seen a settlement like this, with a complete misalignment between what you\u2019re settling and what the resolution is,\u201d said Elena Babinecz, who led fair lending investigations at the Consumer Financial Protection Bureau for 12 years under the Obama, Trump and Biden administrations, before leaving in October.<\/p>\n

\u201cIt\u2019s a slap in the face to the individuals that were harmed; that the Justice Department acknowledges were harmed,\u201d said Babinecz, who was at the bureau when it joined the Justice Department in filing suit against Colony Ridge. \u201cIt\u2019s a complete misjustice, and it\u2019s not at all why these civil rights laws were passed.\u201d<\/p>\n

\"\"<\/p>\n

The Justice Department\u2019s proposed settlement in the Colony Ridge case sets aside $20 million for policing and immigration enforcement but no money for victims of the alleged scheme. U.S. District Court for the Southern District of Texas. Highlighted by The Texas Tribune and ProPublica.<\/p>\n

Seven other attorneys and investigators who formerly enforced the federal government\u2019s lending and housing civil rights laws also told ProPublica and The Texas Tribune that they were stunned by the agreement, which a U.S. district judge must still approve. Indeed, Colony Ridge is the largest Justice Department case since at least 2018 in which the settlement includes no monetary compensation for victims. The judge has scheduled a hearing on Friday over the proposal.<\/p>\n

A coalition of fair housing and civil rights groups has urged the court to reject the settlement, arguing the lawsuit is the only realistic prospect for many consumers to get recompense because they cannot afford private attorneys.<\/p>\n

The Justice Department had built a case against Colony Ridge with \u201cstark and overwhelming evidence,\u201d Clarke told the news organizations. Prosecutors said Colony Ridge repeatedly misled consumers about the condition of lots they purchased, forcing them to spend hundreds or thousands on drainage improvements and utility connections they hadn\u2019t known the land needed. This contributed to consumers defaulting on high-interest loans, according to the lawsuit. Colony Ridge then benefited from the improvements made to the land it foreclosed on and resold the lots at higher prices.<\/p>\n

In the end, tens of thousands of victims were exploited through the developer\u2019s predatory practices in a span of eight years, the government argued. Colony Ridge repossessed more than 15,000 lots, many owned by immigrants, a 2023 investigation by the Houston Landing<\/a> found.<\/p>\n

Of the 183 housing and civil enforcement Justice Department settlements since 2018, only 6% did not include money for victims. Each of those cases was smaller in scope than Colony Ridge. They included a suburban Maryland car dealership accused of racial discrimination in loan offers over a seven-month period and a California landlord who allegedly refused to provide handicapped parking to one tenant.<\/p>\n

None of the settlements \u2014 except for Colony Ridge \u2014 includes funding for police or immigration enforcement.<\/p>\n

\n\"\"Lexi Parra for The Texas Tribune and ProPublica
\n\"\"Lexi Parra for The Texas Tribune and ProPublica
\nThe government argued that Colony Ridge exploited tens of thousands of people through predatory mortgages.<\/p>\n

As federal investigators built a case around how Colony Ridge had treated its largely immigrant customers, conservative media and politicians aligned with Trump \u2014 who had made immigration enforcement a cornerstone of his campaign \u2014 did not focus on how consumers had been harmed. They instead accused the development of being a haven for immigrants.<\/p>\n

They claimed, without providing evidence, that the development was a base for Mexican drug cartels and a \u201cno-go\u201d zone for police. Local law enforcement disputed the assertions, saying that violent crime there was no different from other neighborhoods in and around Houston. State legislative panels convened to investigate the allegations also fizzled out after they were unable to substantiate such claims.<\/p>\n

Neither the federal government nor a lawsuit filed by Texas Attorney General Ken Paxton<\/a> months later raised public safety concerns or a need for more policing or immigration enforcement.<\/p>\n

The Justice Department declined to comment and did not respond to the concerns raised by former employees and people involved in the case. Paxton\u2019s office did not respond to multiple emails. But while announcing the settlement in February, Harmeet K. Dhillon, who leads the department\u2019s Civil Rights Division, argued that Colony Ridge had encouraged illegal immigration by targeting Hispanic consumers with the bait of affordable homeownership. \u201cThis DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration,\u201d she said. In his own news release about the settlement, which would also resolve the Texas suit, Paxton focused primarily on funding set aside for immigration enforcement. \u201cUnder my watch, Texas will never be a sanctuary for illegals,\u201d he said.<\/p>\n

The focus on immigration makes the lives of those who were harmed more difficult, said Catherine Bendor, a manager in the Justice Department\u2019s Housing and Civil Enforcement Section for eight years until 2024.<\/p>\n

\u201cEven if they\u2019re citizens, they\u2019ll likely be hassled by immigration agents who target people based on appearance or accent,\u201d she said.<\/p>\n

John Harris, Colony Ridge\u2019s CEO, declined to be interviewed. The settlement does not include an admission of wrongdoing. He has long maintained that his company, which started in 2011 and offered mortgages for as little as a 1% down payment, has not preyed on its customers.<\/p>\n

The financing terms helped the development grow rapidly, albeit inconsistently, with neat modular homes, trailers and abandoned or vacant lots across more than 33,000 acres. Matt Rascon, a spokesperson for Colony Ridge, said the company \u201cfound success offering a path to land ownership through flexible financing options with no credit checks.\u201d His comments echoed the company\u2019s argument in court that it created a path to homeownership for thousands of lower-income consumers whom risk-averse banks reject.<\/p>\n

Offering loans when others wouldn\u2019t is the most common argument predatory lenders make to justify their practices, said Nathalie Martin, a University of New Mexico law professor who has studied high-cost loans.<\/p>\n

\u201cYou can see from this situation, it doesn\u2019t help people to get them into loans that are more costly than they need to be,\u201d Martin said.<\/p>\n

Former federal officials and Colony Ridge property owners acknowledge that the settlement includes some provisions to protect consumers in the future. It would require Colony Ridge to adopt stricter lending standards and allow buyers to back out of purchases without penalty within two months. The developer would also make $48 million in infrastructure upgrades and provide transparent, bilingual marketing and communication.<\/p>\n

Another provision bars Colony Ridge from developing new lots to sell for three years. But the agreement exempts 674 acres that the developer has already subdivided.<\/p>\n

The concessions are helpful but inadequate because they miss a clear opportunity to help victims recover money they lost, which is a key reason such cases are filed, said Jon Seward, who was principal deputy chief for the Justice Department when he left in May 2023 after 17 years in its Housing and Civil Enforcement Section.<\/p>\n

\"Maria<\/p>\n

Maria Acevedo said Colony Ridge foreclosed on her property in 2021 even though she was making payments. Lexi Parra for The Texas Tribune and ProPublica<\/p>\n

One such victim was Maria Acevedo, who describes herself as a lifelong Republican and U.S. citizen who said she voted for Trump three times.<\/p>\n

A former land developer herself, Acevedo took out a high-interest $40,000 loan in 2018 to buy a half-acre of land where she planned to retire. She then spent an additional $60,000 on surveying, engineering and adding dirt to protect against flooding.<\/p>\n

Acevedo said she planned to refinance her loan but learned that she couldn\u2019t because the property had a lien from a previous owner. Colony Ridge foreclosed on the property three years later, even though Acevedo said she was making payments. Colony Ridge did not comment on Acevedo\u2019s case or those of other individuals in this story. The foreclosure ruined her retirement plans, Acevedo said, adding that the challenges strained her marriage and eventually led to divorce.<\/p>\n

She considered finding a lawyer to sue. But she said she decided to \u201cbecome a team player\u201d and serve as a government witness after federal investigators pledged to help victims like her recover what they lost.<\/p>\n

Now, Acevedo said, she feels betrayed by a settlement that ignores Hispanic consumers like her.<\/p>\n

\u201cI know we were targeted. A blind man could see it,\u201d Acevedo said.\u00a0<\/p>\n

She added that the lawsuit was \u201cgoing smooth, but once the Trump administration came in and took it over, it changed.\u201d<\/p>\n

Even if she could now find a lawyer, her window to file a lawsuit has expired because state and federal laws require they be brought within five years.<\/p>\n

Since returning to office, the Trump administration has abandoned an $80 million settlement<\/a> with Navy Federal Credit Union over illegal overdraft fees, which allowed the bank to continue operating without penalty, and halted dozens of investigations, including a case<\/a> accusing a major Pennsylvania lender of defrauding student borrowers. Both defendants have denied wrongdoing.<\/p>\n

The Trump administration and White House budget director Russell Vought have taken aim at the CFPB, which was formed to protect consumers from getting ripped off by businesses. For Vought, the agency was an example<\/a> of government overreach. It was also one of the first targets<\/a> for Trump\u2019s Department of Government Efficiency. In April, in response to a lawsuit by bureau employees over the CFPB\u2019s attempt to lay off 90% of its staff, the administration offered a compromise proposal: slashing two-thirds.<\/p>\n

The White House and Vought\u2019s office declined to comment, but the administration has argued the agency was needlessly aggressive and wasteful<\/a>.<\/p>\n

The shift away from pursuing consumer protection cases gives the impression that the federal government is no longer serious about protecting regular people from unscrupulous businesses,\u00a0 former Justice Department and CFPB employees said.<\/p>\n

Investigators spent months gathering stories and building trust with residents who were wary of cooperating, said Johnathan Smith, a former deputy assistant attorney general for civil rights during the Biden administration, who visited the development before the lawsuit. The team worked to ensure that the community \u201cbelieved something was going to be different because the Justice Department got involved.\u201d<\/p>\n

\u201cIt\u2019s just heartbreaking how the settlement failed to meet that mark,\u201d he said.<\/p>\n

SuEllen Sanchez and her sister, Keilah Sanchez, were among those who shared their stories with investigators, expecting the government would help them reclaim what they lost. They also provided investigators with hundreds of records from neighbors who said they\u2019d been scammed.<\/p>\n

A U.S. citizen born in Puerto Rico, SuEllen Sanchez had purchased five lots in Colony Ridge in 2020. She saw it as a way to invest money she\u2019d earned as an aesthetician and perhaps open a business there.<\/p>\n

Sanchez said the advertisements and sales representatives for Colony Ridge led her to believe the lots would be ready to build on. They weren\u2019t. Clearing the land for development, acquiring permits and connecting utilities cost her more than $10,000. Colony Ridge foreclosed on one of the lots in 2021, according to Sanchez, who disputes the developer\u2019s claims that she had missed loan payments.<\/p>\n

Sanchez wondered if others also believed they\u2019d been scammed. That\u2019s when she and her sister, a web developer who also had purchased Colony Ridge properties, launched a website asking residents to share their experiences with the developer.<\/p>\n

Sanchez said she was dismayed that all of their efforts resulted in the proposed settlement.<\/p>\n

\u201cThese were consumer-based lawsuits, so you would think they\u2019d actually do something for consumers with everything that they stipulated that this company did wrong,\u201d Sanchez said. \u201cThere\u2019s no way somebody who has all these violations should still be operating.\u201d<\/p>\n

Acevedo feels the same way, and she wants the judge to know it as he mulls the settlement. She doesn\u2019t have a lawyer, but after the Justice Department proposed it, she filed a legal brief in the case demanding compensation as a victim. She offered to testify and present evidence.<\/p>\n

\u201cI want the court to hear me directly,\u201d she wrote to Judge Alfred H. Bennett. \u201cI am willing to swear to my experience.\u201d<\/p>\n

On Friday, she plans to drive 30 miles to Courtroom 9A in the Houston federal building for the settlement hearing, hoping for the judge to grant her request to be heard.<\/p>\n

Misty Harris<\/a> contributed research.<\/p>\n","protected":false},"excerpt":{"rendered":"This article is co-published with ProPublica, a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica\u2019s…\n","protected":false},"author":2,"featured_media":242313,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[815,287,27,29,293,28,92744],"class_list":["post-242312","post","type-post","status-publish","format-standard","has-post-thumbnail","category-texas","tag-courts","tag-politics","tag-texas","tag-texas-headlines","tag-texas-legislature","tag-texas-news","tag-topics"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/242312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/comments?post=242312"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/242312\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media\/242313"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media?parent=242312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/categories?post=242312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/tags?post=242312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}