A Minnesota home seller and financier has been found liable for violating state laws in a scheme that targeted East African Muslims with deceptive real estate deals marketed as “sharia compliant.”

After a two-week trial in downtown Minneapolis, a jury sided with Minnesota Attorney General Keith Ellison’s office Monday afternoon in a civil case alleging that Chadwick Banken knowingly deceived home buyers through a complicated process known as “contract for deed.” The unusual real estate contracts, according to Ellison’s office, reaped massive sums of money for Banken and his companies while leaving his customers financially ruined. 

Through those predatory deals, Banken sold homes to Muslim buyers at high markups and on worse terms than offered on traditional home sales, the state’s lawyers argued, luring customers into risky transactions through the promise of the American dream of owning a home.

“Chad Banken exploited people’s willingness to sacrifice for this dream,” Assistant Attorney General Karthik Raman said during his opening argument. 

The seven-person jury deliberated for about eight hours over two days before finding Banken and several of his companies civilly liable for violating the Minnesota Human Rights Act. The jury also determined that Banken violated the state Consumer Financial Protection Act on two counts, along with the Prevention of Consumer Fraud Act and the Uniform Deceptive Trade Practices Act. The latter four verdicts are considered advisory, meaning a judge will make the final determination on those counts. 

The court will also determine whether to order restitution be paid to victims or assess other penalties, which could include up to $25,000 in fines per violation, along with surrendering profits.

The lawsuit, filed in Hennepin County District Court, followed a 2022 investigation by ProPublica and the Sahan Journal that found a rising market in Minnesota for contract-for-deed home sales, in which homebuyers pay the sellers directly in installments. Many buyers in Minnesota’s expansive Somali community say that paying interest violates their Islamic religious beliefs. They often turned to investors like Banken, who buy the houses and then resell them to people purchasing through a contract-for-deed program, as a way to purchase “interest-free” homes.

In some cases, however, Banken hid the amount of interest, or he front-loaded it into abnormally high down payments, according to lawyers in Ellison’s office. Banken used inflated home prices, confusing paperwork and six-figure balloon payments due at the end of short contracts to push buyers into default and to ultimately retain ownership of the property, the attorney general’s lawsuit said.

Some customers sacrificed far more than they understood when they signed the paperwork. They lost their life’s savings and their homes, unknowingly violating their religious principles in the process. One testified that he ended up homeless and living in his truck.

“I’m not saying Mr. Banken wanted these transactions to fail — I’m not saying that — but he sure was indifferent,” Assistant Attorney General Mark Iris told jurors during closing arguments last Thursday.

Banken sold 160 homes using contracts for deed, targeting Muslims and buyers with poor credit with an offer of “creative financing.” Ellison called Banken’s contract-for-deed scheme “one of the worst that I’ve seen.”

Throughout the trial, Banken’s lawyer, Jack Pierce, described Banken as an honest businessman who only offered alternative financing to those who couldn’t qualify for or objected to traditional avenues. He said Banken purchased the houses his customers picked out, flipped them the same day and charged a markup for profit. 

“For some people it didn’t work out,” Pierce told jurors. “And that’s too bad. It’s unfortunate. That’s life. Sometimes things don’t work out.”

Pierce said Banken was not to blame for the failures. He said his customers’ realtors were responsible for referring clients to his program, drawing up the paperwork and explaining the terms, and he only came in at the end of the process. Pierce said the prospective buyers approached Banken — not the other way around — and Banken only offered a menu of options. It was up to the customers to decide which they wanted, Pierce said.

“Is that wrong?” Pierce asked the jury. “Are we going to punish somebody for providing the opportunity for someone else to buy a house in the option they wanted?”

Lawyers for the state countered that Banken did not give buyers an informed choice, and the customers, some of whom were not native English speakers, didn’t understand what they were agreeing to when they signed the contracts. In some cases the clients were quoted a price and then were surprised at the end of the process with much higher costs. 

Abdinoor Igal, 40, was among the customers who lost money through Banken’s program. A long-haul trucker who operated his own small business, Igal testified through a translator that a real estate agent told him he could purchase a no-interest home through Banken’s sharia-compliant program. 

Igal, whose story was featured in the ProPublica-Sahan Journal reporting, said he put down $20,000 in 2022 to secure a house in suburban Lakeville, which he was originally told would cost about $638,000. When he began to see documents showing a cost of $727,000, he said he had second thoughts, but he was told he would lose his down payment if he backed out.

Later, he found out a large portion of his monthly payments was going toward interest. When he realized the deal he’d entered into was different from what he’d thought it was, Igal asked for an emergency meeting with Banken, saying he needed to sell the house immediately and back out. 

”Put on the market as for sell,” Igal wrote in an email provided to the jury. “I don’t wanna be your slave.”

Unable to get out of the deal, Igal eventually walked away from the house after making $170,000 in payments, according to the lawsuit. The financial toll was so devastating, he said, that he had to send his kids back to live in Africa while he rebuilt his savings. 

“I lived in my truck for one year as a homeless person,” Igal told jurors.

Igal said after the verdict that he was “very happy” with the outcome.

“Me and my kids — we got justice at least,” he said.