Paradise District

Formerly part of the slums now it is a walled off part of Stoneharbor whose inhabitants have sold their souls to the devils and are cursed to damnation. People are strongly discouraged from entering, although city authorities can’t stop anyone from going in due to the Brass Concordat. The name of the district comes from the scam the devils were running called the Paradise Plan. Anyone who signed up would have one of their wishes fulfilled by the fiends, and it would cost them nothing if they brought three more people to sign up. But if they could not get the new people, their souls would be forfeit. Within a month thousands have signed up and they were struggling to get new people, which led to chaos and violence in the city. In the end the city walled off the district and forcibly moved all people there who were affected (the city guards and the Knights of the Holy Flame guard the walls, anyone trying to leave is checked for infernal influence).

On the legal situation of paradisers
After the Paradise District Crisis 40 years ago the Stoneharbor City Council voted to hand over jurisdiction over paradisers from the Magistratum to the Knights of the Holy Flame. This means the city guards are not actively looking for them, but they provide assistance to the knights in dealing with them. With paradisers the knights are free to exercise their judicial discretion, which can lead to some fairly cruel punishments (meant as a deterrent). The party experienced this firsthand when the knights stormed the Paradise District and burned buildings and executed dozens of paradisers in retaliation to the death of Sister Griselle, a missionary of Pelor (this was the result of the party refusing to cover up her death).

Aiding the escape of a paradiser or giving them shelter is considered a grave offense, punishment by the knights range from confinement to the Paradise District and confiscation of all wealth (most lenient) to public torture and execution on a holy day in the Bastion of Light (most severe).

Note that unlike the city guard the Knights of the Holy Flame are almost impervious to bribery. Also, their numbers are fairly low and they mostly patrol the walls of the Paradise District and the neighborhoods around the Cathedral of Light, so they can be avoided if one is careful.

There is no obvious sign that one sold their soul, only a cleric, a paladin or someone with the aid of a specialized magical device can detect it. That is why the knights put a visible mark on the neck of all paradisers. This can be covered up by clothing, but a quick check reveals them, removing them requires serious knowledge of divine magic

Illithid Ruins in Paradise District
The Paradise District is full of abandoned and ruined houses, but deep under it lie an ancient Illithid complex. Through their adventures the party discovered that it was dedicated to the Great Old One, a forgotten deity (that seem to have been awakened through the actions of Lord Ryhel and the party). In the end the fey Prince Sagrell of the Summer Court collapsed the ruins to prevent the Great Old One's influence from spreading.