AG Paxton continues scrutiny of Colony Ridge development, sues over deceptive trade practices

State Attorney General Ken Paxton filed a lawsuit in federal court Thursday accusing Colony Ridge — a fast-growing and heavily Hispanic housing development in Southeast Texas — of deceptive trade practices in a "scheme" to aggressively attract Spanish-speaking buyers.

Paxton's accusations of real estate transaction fraud and other state and federal infractions, including that the development's advertising strategy purposely misled consumers and targeted those with little access to credit, comes after state lawmakers last year scrutinized the residential site over concerns, promoted by Republicans including Gov. Greg Abbott, that it was a safe haven for illegal immigration and drug trafficking. The developer has categorically denied those allegations.

In the suit, Paxton's office said the site's developers created a system that puts purchasers through a "foreclosure mill" on properties that lack promised infrastructure and utility services.

Paxton, in a statement, said Colony Ridge has flagrantly violated Texas law to the detriment of surrounding communities.

“The development profited from targeting consumers with fraudulent claims and predatory lending practices," Paxton said in announcing the lawsuit. “Their deceptive practices have created unjust and outsized harms. Nearby communities have borne a tremendous cost for the scheme that made Colony Ridge’s developers a fortune.”

Representatives for the developers on Thursday did not reply to an American-Statesman request for comment.

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Filed Thursday in the U.S. District Court for the Southern District of Texas in Houston, the state's lawsuit comes after federal prosecutors in December filed a complaint against Colony Ridge that largely outlined the same concerns.

Sitting on roughly 30,000 acres about 30 miles northeast of downtown Houston, the federal and state lawsuits accuse the development of using Spanish-language advertisements to attract customers but then providing transaction-completing documents in English only.

Specifically, the Justice Department's suit, filed by the department's Consumer Financial Protection Bureau, accused Colony Ridge and three affiliated companies of illegally targeting and exploiting "homebuyers because they are Hispanic or don’t speak English well."

"Colony Ridge’s exploitative practice began with misleading advertising on platforms like TikTok and often ended with families facing economic ruin, no home, and shattered dreams," said Alamdar Hamdani, the U.S. attorney for the Southern District of Texas, when the Justice Department brought its lawsuit in December.

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Previously, John Harris, a founder and developer of the property, has defended the development as an opportunity for those with limited options of owning a home to find a place in which to live. In hearings at the Capitol last year, Harris called accusations of the development's connection to illegal immigration and drugs false at best and racist at worst.

Additionally, during the hearing before the House Committee on State Affairs in October, Harris acknowledged the development's high interest rates as inevitable due to the purchasers lacking credit and traditional financing options. He also pointed to the development's $40 million annual contribution to local taxing districts and property association dues that help pay for 10 sheriff's deputies to patrol the area where about 40,000 people live.

Increasing the attention on the Hispanic-driven community last year, Abbott called on lawmakers to advance legislation during a special session in October out of concern for increased crime in the area and a need to address issues of "public safety, security, environmental quality, and property ownership in areas like the Colony Ridge development."

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While some lawmakers last year surveilled the development from the ground and from the air in search of criminal activity, others questioned the reason Harris and the property became a focus in the Capitol.

"I mean, we have a lot of major issues to deal with in this state," said Rep. Jay Dean, R-Longview, during the October hearing in the House. "We preach local control here. And it sounds like local (officials) did everything they were supposed to do in this development. And now you stepped on the wrong toes or something, it would appear to me, and here we all sit."

Statesman staff writer John Moritz contributed to this report.

This article originally appeared on Austin American-Statesman: AG Paxton joins DOJ, files separate lawsuit against Colony Ridge