DOJ sues company behind Texas illegal immigrant shantytown

The Biden administration on Wednesday sued the developers behind a massive illegal immigrant shantytown in Texas, arguing the company that runs Colony Ridge promised Hispanic newcomers move-in ready homes but delivered flood-prone houses and economic ruin.

The Justice Department and the Consumer Financial Protection Bureau said Colony Ridge Development and its related companies entice new residents with promises of homes and loans without worrying about traditional bank loans, Social Security numbers or a U.S. job history.

The company then hits them with predatory loan terms and shifty practices such as using Spanish-language ads to sell the homes while reserving key information — such as that the homes aren’t connected to utilities — in English-only disclosure documents, the government said.

Colony Ridge, which sits in Liberty County north of Houston, has grown from 20,000 residents in 2020 to perhaps 50,000 this year, largely driven by illegal immigrant arrivals, experts said.

Local law enforcement officials in Texas have complained that the area is an epicenter of methamphetamine production and has seen increases in overdoses, thefts, burglaries and runaways.

The state says the community has become a drain on services.

And some news accounts have portrayed the communities as controlled by smuggling cartels.

The feds, in their lawsuit Wednesday, said their legal concern is over bait-and-switch predatory tactics.

CFPB Director Rohit Chopra called Colony Ridge a “set-up-to-fail scheme.”

“Our investigation uncovered that Colony Ridge is baiting borrowers with lies, saddling families with predatory loans for homesites that the company knows have repeatedly [been] flooded with raw sewage and lacked basic utility infrastructure,” he said.

A call to Colony Ridge Land LLC’s customer service line was disconnected. An inquiry submitted via the website got a response that the message was being routed to the appropriate department.

The development’s defenders say the hand-wringing over cartels and illegal immigration is misplaced. What some outsiders call dilapidated, they call a work in progress — homes that are being built piecemeal as the owners plan their next project.

Texas Monthly, a left-leaning news outlet, mocked grim news coverage as “hysteria” from a “right-wing media ecosystem.”

The new federal lawsuit avoids those issues, instead focusing on the business dealings.

The complaint, filed in a federal court in Houston, says Colony Ridge sells lots prone to sewage flooding, misleads borrowers about the state of the property and forces them into a cycle of foreclosure.

Over the three years from September 2019 to September 2022, 40% of properties were flipped, or foreclosed, repurchased and resold. That includes 2,067 properties that were sold at least four times in those three years and 3,267 that were sold three times.

The government asked the U.S. District Court for the Southern District of Texas to order Colony Ridge to cease unlawful conduct, repay affected consumers and pay a fine to the CFPB.