Chadwick Banken exploited Muslim homebuyers with predatory loans that set them up to fail, the Minnesota Attorney General’s Office argued Monday afternoon during opening statements in the real estate broker’s trial.
“He doggedly pursued these buyers,” Minnesota Assistant Attorney General Karthik Rahman told jurors. “He created financial packages that were so overpriced, people could not afford them. He advertised them as Sharia compliant.”
Banken failed to disclose the true terms of the contracts for deed he struck up with buyers, Rahman alleged. With one missed payment, buyers who purchased a home through Banken could “lose thousands of dollars and lose their home and have nothing to show for it.”
“He profited from a scheme that was confusing, misleading and discriminatory,” Rahman argued.
Banken’s attorney, Jack Pierce, argued that Banken disclosed all the terms of the contracts and offered a legal service for homebuyers who were denied traditional mortgages from banks. Pierce said Banken offered contracts for deed as an alternative to mortgages because of new regulations banks imposed on buyers following the 2008 housing financial crisis.
“If you’re self-employed, no loan. If you recently went through a bankruptcy, no loan. Recently divorced? You’re not going to get a loan,” Pierce said of how banks treated some potential homebuyers at the time. “Rather than having a knee-jerk reaction, Mr. Banken came up with a program.”
Banken is on trial for allegedly breaking the state’s consumer fraud laws and for deceptive trade practices laws. Banken sold 160 homes using contracts for deed, which offer fewer protections for consumers compared to conventional mortgages.
He’s also accused of discriminating against Muslims in violation of the Minnesota Human Rights Act. Banken is accused of falsely telling clients that his contracts did not include interest, which is generally forbidden in Islam.
Attorney General Keith Ellison brought the charges against Banken in a 2024 lawsuit in Hennepin County civil court. The lawsuit alleges that Baken inflated home prices and pressured homebuyers to pay large down payments, essentially setting them up to fail.
The Attorney General’s Office alleges that Banken targeted Somali Muslim homebuyers because many of them reject conventional bank loans for religious reasons.
The lawsuit is the result of a joint investigation in 2022 from Sahan Journal and ProPublica that first exposed the questionable sales practice. It also identified Banken as one of Minnesota’s top sellers of homes through contracts for deed from 2019 to the time the story was published in 2022.
Pierce argued in court Monday that there was nothing untoward about Banken selling marked-up homes to buyers who didn’t qualify for traditional mortgages.
“Every time you buy something, there’s a consequence,” he said during opening statements.
Pierce promised to provide evidence at trial that Banken shared detailed information with all of his clients in writing; several homebuyers unhappy with Banken are expected to testify.
“It’s all in writing,” Pierce said. “Mr. Banken is a prolific emailer. He emails at all times of the day.”
Realtors found homes for their customers that Banken bought then and sold to the clients that same day at higher rates. Pierce argued that the realtors who found the homes had a duty to look out for their clients’ interests, and that some may not have been “clear in terms of the agreement” with their clients.
Banken “wasn’t a party to their communications,” Pierce said of how realtors worked with buyers.
As for the discrimination claims against Banken, Pierce argued that there is no consensus on what a sharia-compliant contract involves. One way to comply with sharia law is to put interest payments into the full sale price of a home, divide the total into monthly payments and “change the word ‘interest’ to ‘profit,’ Pierce told jurors.
‘They caused my life to be hell’
Abdinoor Igal, the homebuyer whom Sahan Journal and Propublica profiled in the 2022 investigation, was the first witness to testify Monday afternoon about his experience with Banken.
Igal, 40, bought a five-bedroom Lakeville home from Banken in 2022 for $727,000. At the time, he thought he was buying the home for $638,000, he testified. Igal didn’t find out about the true price until he had already paid $20,000 toward a down payment, he testified.
Igal told jurors that his realtor, Ismail Harun, informed him that the difference was due to his contract not having interest in it. Harun also told Igal that if he backed out of the contract, he would lose the $20,000 downpayment.
When Igal looked over documents and saw a 6.5 percent interest rate on his loan, he asked about it. Harun replied that all contracts in Minnesota require an interest rate written into them, even if they didn’t actually have interest rates, Igal testified.
Banken was present at the meeting where Harun shared that information, Igal said.
“He [Banken] gave me the same answer that Ismail [Harun] gave me, and told me anything Ismail told you is the right thing,” Igal said. “We were sitting together at the time.”
A month later, Igal paid his first monthly payment of $4,779 directly to Banken. When he looked at his first statement, he saw that less than $600 of this went to the principal of his loan. Furious, Igal emailed Banken that he wanted out.
The attorney general’s office showed jurors an email that Igal wrote to Banken: “How do you guys expect me to pay in 5 years if you are taking all the money as profit. I don’t want to be your slave.”
Text messages between the two were also shown in court.
“this (sic) is not what I was expecting from you, Chad,” Igal texted Banken.
Igal asked Banken to buy the house back.
“I don’t want to buy it Abdinoor, you asked for an offer,” Banken replied. “If you want to sell it’s best to find a realtor.”
Igal eventually walked away from the home in 2023, estimating that he lost $170,000 in the process. He lived in his semi-trailer truck for a year after his wife and most of his kids moved to Kenya.
“My life has been destroyed by all the lies that he and Ismail told me,” he said. “I had to take my children to Africa. There was a lot of dispossession with their lives … They [Banken and Harun] caused my life to be hell.”
Pierce is expected to cross-examine Igal Tuesday when he returns to the witness stand.
Juror excused for reading Sahan Journal
Hennepin County District Court Judge Laura Thomas swore in a jury of eight in Banken’s trial about mid-day Monday.
The jury of six women and two men includes a teacher, a former real estate attorney, a psychologist, a former cosmetologist studying to be a paralegal, and an aerospace manufacturing consultant. Two jurors are alternates.
Pierce told the court that he eliminated a prospective juror because the juror had said Sahan Journal was one of his news sources. Pierce argued that because Sahan Journal broke the news about Banken’s questionable home selling practices, the prospective juror could not judge the case in an impartial manner “to the extent that he is getting information from this source.”
“The main source for his news is the publication that started this entire lawsuit,” Pierce said.
Minnesota Assistant Attorney General Lindsey Lee told the court that her office opposed the strike, stating that she believed the prospective juror’s media consumption “could be dealt with.” She added that the juror had not been asked whether he had read about the case against Banken, and never mentioned that he had.
Although Thomas said she “agreed with the state’s approach” in the matter, the juror was dismissed because the defense and prosecution were each allowed to automatically strike two prospective jurors.
Testimony is scheduled to resume at 8:30 a.m. Tuesday. The trial is expected to last for just over two weeks.
