Authored by Wendi Strauch Mahoney via AmericanThinker.com,
Texas attorney general Ken Paxton has asked the Texas State Securities Board (TSSB) to review what he says is evidence that entities tied to the East Plano Islamic Center (EPIC)’s EPIC City project violated state and federal securities laws — and to refer the matter back so he can file suit.
Paxton called the alleged misconduct “flagrant,” arguing that state law requires a TSSB referral before his office can bring a securities action.
“After a thorough investigation, it has become clear that the developers behind EPIC City flagrantly and undeniably violated the law,” said Attorney General Paxton.
“The bad actors behind this illegal scheme must be held accountable for ignoring state and federal regulations. In accordance with state law, the TSSB should review our findings and refer this matter to me for further legal action.
EPIC City is a 402-acre master-planned community near Josephine, Texas, spanning Collin and Hunt Counties. Materials describe housing (single-family, townhomes, multifamily), a mosque, schools, parks, senior living, and retail. The project vehicle, Community Capital Partners, LP (CCP), has been described in EPIC’s promotions as created by EPIC, with EPIC as the beneficiary of project profits.
In March, Paxton opened a consumer-protection probe and served a Civil Investigative Demand (CID) on CCP, the vehicle formed to develop EPIC City. The March 25, 2025 press release highlighted EPIC’s own promotional statements that CCP was “created by EPIC” and that EPIC is the “only beneficiary of profits” from the project.
Two days later, on March 27, Gov. Greg Abbott announced that the TSSB would investigate EPIC and “affiliated entities for potential failures to comply with applicable state and federal securities requirements, including protections against fraud.” In the same press release, Abbott said he sent a letter dated March 26 requesting EPIC “cease and desist funeral service operations.” He also said that “a dozen state agencies” were investigating “serious legal issues” concerning the potential illegal activities involving the alleged purchase of Texas property by “foreign adversaries … taking place at EPIC.”
On April 14, 2025, Paxton expanded his investigation, demanding communications from Plano, Richardson, Wylie, and Josephine due to alleged local support for the project. The requests sought emails and records referencing EPIC, EPIC City, and CCP.
Sen. John Cornyn (R-Texas) also asked the Department of Justice to open a federal civil rights probe into EPIC City, as highlighted in his April 11, 2025 letter to the assistant attorney general for the DOJ’s Civil Rights Division. In the letter and subsequent press release, Cornyn expressed concern over the potential for religious discrimination that might “violate the constitutional rights of Jewish and Christian Texans, by preventing them from living in this new community and discriminating against them within the community.” Cornyn continued,
Religious-based discrimination is a constitutional violation as well as a federal rights violation. Appropriate steps should be taken to ensure that this community does not run afoul of these obligations. It may also be appropriate for an investigation to explore whether the proponents of the proposed development are abiding by existing federal and state prohibitions on the enforcement of Sharia law.
The DOJ closed its investigation with no charges, after developers affirmed that the community would be inclusive and marketed under the Fair Housing Act. However, the decision did not touch the state’s ongoing consumer protection and securities inquiries.
Why Paxton’s inquiry?
CCP marketed $80,000 shares to accredited investors with “each share purchased [guaranteeing] one lot in EPIC City” with a stated 15% discount, an arrangement that is central to Paxton’s investigation.
Under the Texas Securities Act and the Supreme Court’s Howey test, a “security” includes an investment contract, money invested in a common enterprise with an expectation of return that depends on the managerial efforts of others. Promising that a discounted $80,000 “share” secures a right to buy a developed lot later signals an expected economic gain that hinges on the developer entitling land, installing infrastructure, and delivering lots. The arrangement fulfills the investment-contract definition used by Texas and federal law.
Anti-fraud rules would also apply. If EPIC/CCP’s “share” is treated as an investment contract, it is a security under the Texas Securities Act (TSA). Once the “share for future lot right + discount” is characterized as a security, certain rules apply. Before any security is offered or sold in Texas, it must be registered or notice-filed — or the sale must qualify for an exemption — and the issuer must provide truthful, non-misleading disclosures. Even if an exemption applies, material misstatements or omissions about permitting status, ownership, timelines, lot deliverability, or the use of investor funds can trigger anti-fraud liability. Paxton’s Oct. 14 statement characterizes the alleged conduct as securities law violations.
The share pitch also heightens the expectation of profit: a guaranteed right to buy a finished lot at a fixed discount functions as a return mechanism that depends on CCP/EPIC obtaining approvals, building infrastructure, and delivering lots. Investor upside (the discount and potential appreciation) stems from the promoter’s efforts, not the investor’s — classic Howey elements recognized by Texas courts.
Finally, context matters: As of mid-2025, public reporting shows no issued construction permits, raising materiality concerns for any marketing that implies near-term delivery of “developed lots.” That gap between promotional claims and on-the-ground progress is precisely what securities regulators scrutinize under anti-fraud provisions.
Therefore, the specific potential material flashpoints in EPIC’s marketing/investor pitch are related to
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Deliverability/Timing: Saying a share guarantees the right to a developed lot implies that the developer can obtain approvals, install infrastructure, and deliver lots on a timeline. If permits/plat approvals weren’t in hand (or were far off), that’s material.
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Economics: A 15% discount and advertised per-lot price ranges anchor investor return expectations. If cost inputs, financing, or timelines were speculative or changed materially, failing to update buyers can be an omission.
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Use of Proceeds/Structure: Who actually benefits (e.g., the relationship between EPIC and CCP), how funds are escrowed/spent, and contingencies if lots are delayed or never delivered — all are core disclosure items in a securities offering. If the marketing glossed over these or suggested protections that didn’t exist, that’s classic anti-fraud territory.
Amy “Mek” Mekelburg — an activist and founder and editor-in-chief of RAIR Foundation USA — argues that EPIC City will become a “sharia-controlled enclave.”
She says she has tracked the project since its inception and highlighted a promotional EPIC City video on X in which Muslim leaders describe the community as the “epicenter of Islam in America.” According to Mekelburg, her pinned post of that video drew over 7 million views before X removed it. She points to EPIC’s 76,000-square-foot Islamic complex — “one of the largest in Texas” — as evidence of growing influence and calls EPIC City “a massive, sharia-adherent residential and commercial enclave … a deliberate blueprint for a self-contained Islamic community, built around sharia principles and insulated from public oversight.”
According to the Dallas News, “Yasir Quadhi, resident scholar at EPIC,” said “the only laws the community will enforce will be Texas and federal ones. They are not seeking to impose religion on anyone.”
Separately, House Bill 4211 — ceremonially signed by Gov. Greg Abbott in September 2025 — “creates a framework for regulating entity-owned residential arrangements,” addressing ownership structures cited in EPIC City and EPIC Ranches, according to Texas Scorecard.
Abbott said the measure is intended to prevent using religion “as a form of segregation,” framing the debate around both religious freedom and the right to contract, and pledging to ensure that Texas law prevents “discriminatory compounds” from being built.
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