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.
Colony Ridge, which sold plots in massive subdivisions north of Houston, had become a “one-stop shop for discriminatory lending,” 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.
“Our goal at the end of the day is to ensure that victims are compensated for their loss,” Clarke declared.
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 — 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.
“I’ve never seen a settlement like this, with a complete misalignment between what you’re settling and what the resolution is,” 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.
“It’s a slap in the face to the individuals that were harmed; that the Justice Department acknowledges were harmed,” said Babinecz, who was at the bureau when it joined the Justice Department in filing suit against Colony Ridge. “It’s a complete misjustice, and it’s not at all why these civil rights laws were passed.”
Seven other attorneys and investigators who formerly enforced the federal government’s 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.
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.
See here for the previous update. The judge in this case is Al Bennett, so that at least is good news for the residents who were victimized. I expect him to give this a thorough review. As the story notes, this is wholly consistent with the decimation of consumer protections under the Trump administration. The only way this could have been more on brand is if there had been a contribution to a fund controlled by Trump, or a big purchase of some shitty Trump-branded product, as part of the settlement. I wouldn’t rule it out as an auxiliary and ancillary agreement.
UPDATE: Man this really sucks.
The Justice Department said Friday that it would move forward on a proposed $68 million settlement with a Texas land developer it had accused of preying on Hispanic residents, despite a judge’s concerns that the agreement did not do enough to help victims.
During a hearing, U.S. District Judge Alfred H. Bennett questioned why the settlement had no compensation for those who were harmed and grilled a federal prosecutor over $20 million devoted to police and immigration enforcement. He said he was uncomfortable with the provision because the Justice Department’s lawsuit against Colony Ridge, which has massive subdivisions north of Houston, mentioned nothing about public safety or immigration.
“I thought I was dealing with … folks who had been defrauded, with allegations of above-market interest rates, improper foreclosures,” Bennett said, holding up the original lawsuit in his right hand and the settlement in his left. “Now, all of the sudden, I’m being asked to OK increased law enforcement?”
“Who in the settlement room said it would be a good idea to give $20 million to law enforcement?” Bennett asked early in the hearing. “Where did that come from?”
[…]
Of the 183 housing and civil enforcement settlements the Justice Department has announced since 2018, only 6% lacked money for victims, and none included funding for police or immigration enforcement, an analysis by the news organizations found.
Including such a provision in a predatory lending case has never been done before, said Bennett, who sought to find a compromise.
An hour into the hearing, Bennett asked the Justice Department and the attorneys for Colony Ridge, which has denied any wrongdoing, whether they would consider his suggestions to revise the settlement to obtain his approval.
Colony Ridge attorney Jason Ray said his client would consider it. [Senior prosecutor Varda] Hussain said the Justice Department wasn’t interested.
Instead, the Justice Department said it would pursue the settlement without seeking judicial approval under a provision of federal law that allows it to do so. That means the court will not supervise Colony Ridge to ensure the developer follows the terms of the settlement, said Johnathan Smith, former deputy assistant attorney general for civil rights during the Biden administration.
Smith, who helped assemble the Colony Ridge lawsuit three years ago, said now the case simply goes away because there is no one to enforce it. He added that the Justice Department cannot sue Colony Ridge based on the same claims in the future.
“By having settlements that are public and that are court-enforced, it sends a clear message to other potential bad actors that there could be real consequences for their actions,” Smith said in an email.
He said the Justice Department’s decision amounts to a “get out of jail free card.”
The “DOJ is turning its back on the victims, and those victims are left with no recourse and no assurance that any actions will be taken to remedy the harms that were identified in DOJ’s original complaint,” Smith said.
“Appalling” seems like to small a word. Whatever is left of the Trump Justice Department at this point needs to be burned to the ground and then rebuilt from scratch.