Minnesota Sues Seller for Predatory Practices Against Somali Muslim Homebuyers

The Minnesota attorney general’s office filed a lawsuit against Chadwick Banken and his businesses, accusing them of exploiting the East African Muslim community in real estate transactions. The lawsuit claims Banken and his six limited liability companies violated state and federal laws, including Minnesota’s ban on religious discrimination. They allegedly used contracts-for-deed to inflate home prices and impose unfair terms on Muslim buyers.

Attorney General Keith Ellison stated that while the focus is on Banken, the case serves as a warning to others involved in similar deeds. Ellison emphasized the financial harm to families when they cannot repay, leaving them without a home or funds. Banken has not made any public comments regarding the allegations.

The lawsuit, filed in Hennepin County district court, follows a 2022 ProPublica and Sahan Journal investigation, which highlighted the rise of contract-for-deed sales targeting the Somali community. These buyers often seek interest-free financing due to their religious beliefs, making them susceptible to manipulative deals. Victims reported signing misunderstood contracts, leading to financial difficulty.

The lawsuit asserts Banken’s tactics included exorbitant home prices, substantial down payments, and large balloon payments, causing default and eventual property repossession. ProPublica and Sahan Journal featured a case of a buyer named Abdinoor Igal, now revealed as part of the lawsuit as “purchaser 2.” Igal lost his home and spent significant sums, ultimately leading his family to seek shelter in Kenya while he lived in his truck.

Igal’s experiences highlighted the broader issue driving legislative reforms. Minnesota lawmakers are working on a bill to revise the contract-for-deed law, aiming to prevent exploitative practices and offer protections and recovery avenues for wronged buyers. The bill is included in an omnibus proposal awaiting legislative approval.

Banks reportedly sold countless homes since 2017 using these deceptive contracts. The lawsuit mentions one entity, Slow Flip LLC, as emblematic of such predatory tactics: high down payments and monthly installments, leading to inevitable buyer default, followed by reselling the property. Internal communications showed Banken targeted buyers with poor financial backgrounds, disguising transactions as commercial rather than residential.

The contracts did not fully disclose total home costs or the balloon payments, violating the federal Truth In Lending Act. These terms unfairly burdened Muslim purchasers, contradicting Banken’s marketing claim of assisting underserved communities.

Ellison described Banken’s actions as duplicitous, emphasizing profiteering at the expense of struggling families. He urged affected buyers to contact his office for assistance, suggesting avenues for future restitution. Meanwhile, Igal and others continue to endure personal challenges resulting from these predatory practices. Igal shared his struggles, expressing hope but facing ongoing uncertainty about reuniting his family.