Jurors found real estate broker Chadwick Banken liable Monday afternoon of consumer fraud and discrimination for selling homes at inflated prices and for preying on Muslim buyers.
The verdict comes after two weeks of testimony and more than seven hours of deliberation.
Banken was being tried in civil court for allegedly breaking the state’s consumer fraud and deceptive trade practices laws. Banken sold 160 homes using contracts for deed, which offer fewer protections for consumers compared to conventional mortgages.
Jurors unanimously found Banken liable for violations of the federal Consumer Financial Protection Act, and federal deceptive, abusive and unfair trade practices laws.
He was found liable for violating the Minnesota Prevention Against Consumer Fraud Act and Uniform Deceptive Trade Practices Act. Jurors also found him liable for discrimination under the state Human Rights Act.
Neither Banken nor his attorney, Jack Pierce, were present in the courtroom Monday to hear the jury’s decision. They waived their right to appear in court last week.
If Hennepin County District Court Judge Laura Thomas follows through with the jury’s findings against Banken, she will decide whether to order Banken to pay restitution to his clients, and how much he’ll have to pay.
Juror Christopher Clark, 35, told Sahan Journal that jurors decided early in their deliberations not to consider any of the emotional testimony from homebuyers who took the witness stand throughout the trial. Clark said they focused on the letter of the law and the documents provided as evidence, calling the pleas for emotion “a waste of time.”
“The trial could have been days shorter and could have been spared some of the stories, which were sad, but I don’t think that the stories we heard really impacted us as we were deliberating at all,” Clark said. “We spent a lot of time going over all of the documents; there were hundreds of them, and we were able to reach our findings by comparing what the law said.”
Clark, a manufacturing professional, said finding Banken liable for violations of the federal consumer financial protections was “easy,” because the law is clear on mortgage contract requirements, and there were several examples in which those requirements were missing from Banken’s documents.
Similar omissions and inconsistencies in Banken’s contracts led the jury to the same conclusion for the rest of the violations, including the discrimination count under the Human Rights Act. Clark called the jury’s decision on the discrimination allegation “surprising.”
“Before I had come into this courtroom and before I had read the actual law for myself, I would have thought that there were no human rights violations,” Clark said. “Despite what my feelings were, when we read what the law said in black and white and looked at the evidence presented, there was a clear violation there, which is why we ruled in the direction that we did.”
He said he thought Banken’s testimony came off as sincere, and that the evidence they reviewed pointed more toward negligence than a desire to hurt or take advantage of his clients.
“I don’t think he had the intent to hurt anyone, and I don’t think that he’s a villain or a bad person,” he said. “I think he made some mistakes in the way he runs his business, but as a person, as an individual, I can’t really say anything about it.”
The case against Banken
Attorney General Keith Ellison brought the charges against Banken in a 2024 lawsuit in Hennepin County civil court. The lawsuit alleged that Banken inflated home prices and pressured homebuyers to pay large down payments, essentially setting them up to fail. Real estate agents found homes for their customers that Banken bought then sold to the clients that same day at higher prices.
Banken discriminated against Muslims in violation of the Minnesota Human Rights Act, and falsely told clients that his contracts did not include interest, which is generally forbidden under sharia law in Islam.
“He created financial packages that were so overpriced, people could not afford them, and advertised them as sharia compliant,” Assistant Attorney General Karthik Raman said in his opening statements.
Assistant Attorney General Mark Iris said during the state’s closing argument Thursday that the theme of Banken’s business dealings was deliberate confusion, citing discrepancies between what Banken told customers about their contracts and what was actually written in them.
“The realtors were confused [and] the customers were confused,” Iris told jurors. “Customers couldn’t wrap their heads around these transactions. No one is explaining to them. No one bothered.”
Iris said Banken misled Muslim customers about whether their contracts had interest, charged them more for the same product, and misled them about the nature of their down payments, telling them the markups were in lieu of interest.
“Mr. Banken made religion a choice in this case and for these customers,” Iris said. “They came to Mr. Banken because they wanted a product that conformed to their religious beliefs, and he leveraged that into a choice. He exploited that to get more money out of them.”
While the state argued that Banken broke several laws, Banken’s defense built a case around the assertion that Banken disclosed the terms of his home sales in writing, and that some real estate agents didn’t properly communicate them with their clients.
Jurors were asked to determine whether there is a “preponderance of evidence” against Banken. If found liable, he could face financial penalties, including restitution. Prison time is not an option in civil lawsuits such as this.
Multiple people who bought homes from Banken testified throughout trial that he misled them about the prices, and manipulated them.
Fowsiyo Hassan, whose sons bought her a home from Banken, testified that she trusted Banken over her son, Hassan Salat, when her son raised concerns about buying from Banken.
“I told him [Salat], ‘You don’t know anything about real estate,’” she testified. “‘This gentleman [Banken] is a rich guy and he wouldn’t deceive me. Chad, I believe, sold many houses. I don’t believe he deceived me. He is a rich guy and I always believe American guys who sell houses.”
Hassan and her sons testified that they thought Banken was selling them a home for $610,000, and that he hid its true cost of $678,497. She made monthly payments for her home directly to Banken, who eventually evicted her when she could no longer afford the cost.
“[Salat] hardly spoke English; he was basically a warm body. He didn’t know what he was doing at the closing. He didn’t know what he was doing here,” Iris said during the state’s closing argument. “He could barely remember Mr. Banken’s name, and Mr. Banken gave him a $678,000 loan.”
Jessica Lacosse, a mother of three, testified that Banken “betrayed” her trust when she purchased an Oakville home from him.
“I looked up to Chad. I never had a father,” she said. “I had told him at closing that what he was doing was my hopes and dreams: I wanted to get into real estate investment. He would give business advice to me that he didn’t need to give.”
Lacross testified that she thought she was buying her home for $350,000, and that Banken hid the actual cost — $378,000.
“The concept of me putting in the offer and it being flipped for more money was never discussed with me by anyone,” Lacoss testified.
The lawsuit against Banken is the result of a joint investigation in 2022 from Sahan Journal and ProPublica that first exposed the questionable real estate sales practice. It also identified Banken as one of Minnesota’s top seller of homes through contracts for deed from 2019 to the time the story was published in 2022.
How contracts for deed work
Contracts for deed are often used by homebuyers who don’t financially qualify for traditional home mortgages, or who reject them as an option. Many Muslims, for example, follow Islamic religious practices that discourage lenders from profiting from interest payments, which prevent them from taking out a conventional mortgage from a bank.
Contracts for deed are a type of loan that offer alternatives to conventional mortgages, and can be structured to avoid interest. But the loans, which are handled directly by the home seller, also provide fewer consumer protections. Most must be paid in five years while home loans from a bank typically last 30 years.
The buyer in a contract for deed sale pays the seller directly for the home in installments.
Experts and consumer advocates said that many of the contract for deed sales Sahan and ProPublica examined in 2022 were structured to prevent buyers from paying off their homes at the end of their five-year contracts.
Throughout the trial, prosecutors alleged that Banken misled customers by putting the 30-year loan terms in the initial purchase agreements, then amended the contracts to require a six-figure balloon payment for the remainder of the loan after five years. Many customers could not keep up with monthly payments and ultimately lost their homes.
Sahan and ProPublica’s investigation also prompted state and federal lawmakers to pass new laws reforming contract for deed practices. The federal Consumer Financial Protection Bureau also created new guidelines to govern contract for deed sales.
