DOJ Seeks to Divert the Settlement in a Predatory Lending Case From Hispanic Victims to ICE to Target Them

Donald Trump has been eager to scrape together sources of funding that do not require him to ask the permission of Congress. Here is a novel one: Using settlements from unrelated Justice Department cases to divert money from restitution to victims and use it for Trump’s policy priorities. That’s exactly what his DOJ is doing in a case in Texas.

ProPublica has the story:

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. …

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. …

As federal investigators built a case around how Colony Ridge had treated its largely immigrant customers, conservative media and politicians aligned with Trump—who had made immigration enforcement a cornerstone of his campaign—did not focus on how consumers had been harmed. They instead accused the development of being a haven for immigrants.

They claimed, without providing evidence, that the development was a base for Mexican drug cartels and a “no-go” zone for police. Local law enforcement disputed the assertions, saying that violent crime there was no different from other neighborhoods in and around Houston. State legislative panels convened to investigate the allegations also fizzled out after they were unable to substantiate such claims.

This is an attempt to harness the legal resources of the Department of Justice to shake down defendants for money for Trump’s political projects. Fortunately, the case will soon go before a judge who will have the ability to block the settlement—but not every judge is going to step up to prevent these abuses.

The Executive Watch is a project of the Institute for the Study of Modern Authoritarianism, and its flagship publication The UnPopulist, to track in an ongoing way the abuses of the power of the American presidency. It sorts these abuses into five categories: Personal Grift, Political Corruption, Presidential Retribution, Power Consolidation, and Policy Illegality. Click the category of interest to get an overview of all the abuses under it.

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