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In a significant legal development, the Justice Department has announced its intention to proceed with a proposed $68 million settlement with Colony Ridge, a land development company in Texas. This decision comes despite concerns raised by U.S. District Judge Alfred H. Bennett regarding the adequacy of the settlement in addressing the needs of victims, primarily Hispanic residents who allege they were exploited.
During a recent court hearing, Judge Bennett expressed skepticism about the settlement’s lack of compensation for harmed individuals and questioned the allocation of $20 million for police and immigration enforcement. He emphasized that the original lawsuit filed against Colony Ridge centered on allegations of predatory lending practices, including high-interest loans and improper foreclosures, rather than public safety concerns.
“I thought I was dealing with … folks who had been defrauded, with allegations of above-market interest rates, improper foreclosures,” Bennett remarked during the hearing, highlighting the disconnect between the lawsuit’s claims and the proposed settlement provisions.
The inclusion of funds directed toward law enforcement raised eyebrows, especially since neither the Justice Department’s lawsuit nor the parallel state lawsuit filed by Texas Attorney General Ken Paxton addressed crime issues. Despite these concerns, Justice Department senior prosecutor Varda Hussain defended the provision, citing community concerns about crime, as reported by residents of Colony Ridge.
The legal battle against Colony Ridge has spanned over three years, with allegations that the developer misled Hispanic consumers into taking on unaffordable loans, leading to foreclosures that enriched the company at the expense of vulnerable families. Former officials from the Justice Department and the Consumer Financial Protection Bureau expressed shock at the settlement’s lack of victim compensation, characterizing it as a departure from standard practices observed in similar cases.
Analysis by ProPublica and The Texas Tribune found that only 6% of housing and civil enforcement settlements announced by the Justice Department since 2018 have lacked victim compensation, with none previously including provisions for police or immigration enforcement. This unprecedented approach has raised questions about the implications for future cases involving predatory lending practices.
As the hearing progressed, Judge Bennett sought to find a middle ground, proposing revisions to the settlement to better protect the interests of the victims. However, while Colony Ridge’s attorney indicated a willingness to consider changes, the Justice Department declined to engage in these discussions, opting to pursue the settlement without judicial approval.
This decision means that there will be no court oversight to ensure Colony Ridge adheres to the terms of the settlement, effectively leaving victims without recourse. Johnathan Smith, a former deputy assistant attorney general for civil rights, criticized the move as a “get out of jail free card” for the developer, arguing that it undermines accountability and leaves victims without the support they deserve.
The Justice Department has not yet addressed these criticisms publicly. However, during the hearing, Hussain assured the court that the department would ensure compliance with the settlement terms, which reportedly include stricter lending standards. Residents like Keilah Sanchez, who have been vocal about their experiences, expressed disappointment at the prospect of a settlement that fails to address past grievances.
“It’s unbelievable, but at this point, I don’t expect much from these agencies,” Sanchez stated, reflecting the sentiments of many residents who feel let down by the legal system meant to protect them.
