Securities Regulation Daily Wrap Up, SECURITIES OFFERINGS—E.D. Tex.: 'EPIC City' Texas property developer asks to move action by AG Paxton to federal court, (Jan 12, 2026)
Law Firms Mentioned:Terrazas PLLC
Organizations Mentioned:Community Capital Partners LP | Texas Workforce Commission
A Texas firm developing an allegedly Islamic-focused planned community disputes that it illegally offered unregistered securities.
A Texas firm at the center of a dispute between Texas Attorney General Ken Paxton and the Texas State Securities Board (TSSB) has filed to remove a state enforcement action to federal district court. Community Capital Partners LP (CCP) argues that the action, which alleges the sale of unregistered securities, raises “disputed and substantial questions of federal law” whether it involves “covered securities,” (Texas v. Community Capital Partners LP, No. 4:26-cv-00029-SDJ-AGD (E.D. Tex. Jan. 8, 2026)).
The planned development has been beset by multiple state investigations and accused by Texas Governor Greg Abbott of illegally promoting religious discrimination.
EPIC development. CCP filed a Notice of Exempt Offering of Securities in June 2024 for an $80 million offering relating to residential real estate. The filing claimed a Rule 506(c) exemption and indicated that no securities had been or would be sold to persons who do not qualify as accredited investors.
Controversies. According to a Collin County press release, CCP purchased a 402-acre site outside the town of Josephine in September 2024 with plans to develop 1,000 homes, a mosque, a K-12 religious school, a senior living center, and retail space. The press release stated that the development “has ties to the East Plano Islamic Center (EPIC), one of North Texas’ largest mosques.”
The county listed multiple state investigations of CCP and EPIC, including by the Texas Rangers, Texas Workforce Commission, and Texas State Securities Board.
Texas Governor Greg Abbott signed a law in September 2025 to “ban residential property developments, like EPIC City, from creating Sharia compounds and defrauding and discriminating against Texans.”
Texas AG action. In a state enforcement action filed last December 5, Paxton alleges that an “illegal land development scheme” by CCP, East Plano Islamic Center (EPIC), and others violates Texas state securities law.
The complaint alleges that EPIC marketing materials “give the clear impression that EPIC City is a community targeted at and reserved for those of the Muslim faith.”
The complaint asserts that CCP failed to comply with the Rule 506 exemption and did not fall into the rule’s safe harbors for sale of unregistered securities. It also alleges certain fraud charges and failure by CCP to register as a securities dealer with the Texas Securities Commissioner.
Texas State Securities Board statement. However, the TSSB said on December 8 that its staff had concluded that the sales of limited partnership interests did not constitute securities under the Texas Securities Act.
The TSSB also said that a statement by Fox News that Texas Securities Commissioner Travis Iles regarding CCP’s failure to meet registration requirements was “wholly false.”
Removal. In its notice for removal, CCP said the state AG’s action is removable to federal court under 28 U.S.C. § 1441(a) because it presents a federal question within the meaning of 28 U.S.C. § 1331: the scope of preemption under the National Securities Markets Improvement Act of 1996 (NSMIA).
The AG’s petition alleges that defendants violated state securities law because their offerings did not qualify for the federal exemption provided by SEC Regulation D and therefore were not “covered securities” under NSMIA. However, CCP says this is a “threshold federal determination” that is disputed and requires adjudication.
“Accordingly, this case necessarily requires adjudication of disputed and substantial questions of federal securities law—specifically, the scope and operation of NSMIA preemption and the circumstances under which a federally defined covered security loses that status,” the defendants wrote.
As a result, the defendants asked that the case be removed to the U.S. District Court for the Eastern District of Texas, Sherman Division.
This is case No. 4:26-cv-00029-SDJ-AGD.
Attorneys: Thomas Bevilacqua, Office of the Attorney General, for The State of Texas. Eric A Hudson (Terrazas PLLC) for Community Capital Partners LP.
Companies: Community Capital Partners LP
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