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.

What the Left Is Saying

Progressive advocates and former Justice Department officials criticized the settlement as a failure to protect vulnerable Hispanic homeowners who were allegedly victimized by predatory lending practices. Johnathan Smith, former deputy assistant attorney general for civil rights during the Biden administration who helped assemble the Colony Ridge lawsuit three years ago, called the settlement 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 in an email.

Former attorneys and investigators with the Justice Department and Consumer Financial Protection Bureau, including those involved in filing the original lawsuit in 2023, told ProPublica and The Texas Tribune they were stunned that the Trump administration had reached a settlement that did not seek to compensate victims.

Progressive advocacy groups noted that the settlement marks an unprecedented use of law enforcement funding in a predatory lending case. An analysis by ProPublica and The Texas Tribune found that 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.

What the Right Is Saying

The Justice Department defended the settlement, with senior prosecutor Varna Hussain stating that the $20 million provision for police and immigration enforcement came from the office of Texas Attorney General Ken Paxton. Hussain said Colony Ridge residents told federal investigators they were worried about crime in the development after the lawsuit was filed.

'I understand what it might look like to you, but I am telling you that this is a concern that friends of the court and residents will tell you exists,' Hussain said during the hearing.

The Justice Department argued that the settlement, while not providing direct compensation to victims, requires Colony Ridge to adopt stricter lending standards. In a court filing, the developer said it had already started implementing these provisions.

Colony Ridge has denied any wrongdoing. The company's attorney Jason Ray said his client would consider the judge's suggestions to revise the settlement, though Hussain indicated the Justice Department was not interested in making changes.

What the Numbers Show

The proposed settlement amounts to $68 million. Of this, $20 million is designated for police and immigration enforcement — a provision the judge found unprecedented.

The settlement ends a three-year legal dispute in which the Justice Department and Consumer Financial Protection Bureau accused Colony Ridge of deceiving tens of thousands of Hispanic consumers into taking out high-interest loans that many could not afford. The developer then benefited when it foreclosed on their properties, prosecutors said.

An analysis by ProPublica and The Texas Tribune found that of the 183 housing and civil enforcement settlements the Justice Department has announced since 2018, only 6% lacked money for victims. None of those 183 settlements included funding for police or immigration enforcement.

The original lawsuit, filed in 2023, alleged fraud, above-market interest rates, and improper forecloses — not concerns about public safety or immigration.

The Bottom Line

Judge Bennett expressed discomfort with the settlement's structure, noting that the original lawsuit contained no mention of public safety or immigration concerns. Despite his objections, the Justice Department said it would pursue the settlement without seeking judicial approval under a provision of federal law.

This means the court will not supervise Colony Ridge to ensure the developer follows the terms of the settlement. Former deputy assistant attorney general Johnathan Smith said this means the case simply goes away because there is no one to enforce it, and the Justice Department cannot sue Colony Ridge based on the same claims in the future.

The Justice Department did not immediately respond to a request for comment about Smith's criticisms. The Texas Attorney General's office, which originated the idea for the law enforcement funding provision, did not respond to a request for comment.