Prosecutors grill Chad Banken for hours about alleged predatory home sales, discriminatory practices

Prosecutors with the Minnesota Attorney General’s Office questioned Banken about his business practices for approximately four hours on the sixth day of his civil trial in Hennepin County District Court. They laid out multiple instances where Banken acquired homes for one price and sold them to clients with exorbitant markups, a tactic the attorney general’s office says set up multiple homebuyers for failure.

Banken’s testimony on the witness stand began Monday morning, a week after his trial began, and is expected to resume Tuesday morning.

The attorney general’s office sued Banken in 2024 for allegedly breaking the state’s consumer fraud and deceptive trade practices laws. He’s also accused of discriminating against Muslim homebuyers in violation of the Minnesota Human Rights Act, and of falsely telling clients that his contracts did not include interest, which is generally forbidden under sharia law in Islam.

Abdinoor Igal testified last week that he bought a $727,000 home in Lakeville from Banken in 2022. Banken had acquired the home for just under $638,000 and tacked on a nearly $90,000 markup. Igal ended up losing his home and moving his family to Kenya after being unable to afford his monthly payments.

Banken bought another home for $720,000, added a $65,000 markup and sold it to a different client, Abdishakur Omar, for $775,000, according to prosecutors.

“(Igal)’s going to be immediately underwater in the home with that markup right?” Assistant Attorney General Mark Iris asked Banken.

“I guess it depends on how you define underwater,” replied Banken, who was composed during his testimony and answered many questions with short “yes” or “no” answers.

Homebuyer Julian Fernandez Luchi testifies through an interpreter on June 15, 2026. Luchi told the court that he purchased a home from Chad Banken, who is on trial in civil court for allegedly using predatory sales practices. Credit: Cedric Hohnstadt

Banken has sold 160 homes using contract for deed, an alternative to conventional mortgages that offers fewer consumer protections. The option has become popular with Muslim families who follow Islamic practices and avoid interest payments in the pursuit for homeownership. 

Real estate agents found homes for their customers that Banken bought then sold to the clients that same day. Buyers made large monthly payments directly to Banken to pay off their homes on contracts that typically lasted five years; traditional home mortgages can last 30 years.

“I work with realtors, lenders, and their clients who are unable to get a mortgage, and I help out by purchasing a property and then turning around and providing a contract for deed,” Banken said Monday when asked to describe his business.

The attorney general’s office alleges in its lawsuit that Banken evicted buyers for missing just one monthly payment.

Minnesota Assistant Attorney Generals Karthik Raman (left) and Mark Iris (middle) listen to witness testimony on June 15, 2026, during Chad Banken’s trial in civil court. Credit: Cedric Hohnstadt

The lawsuit followed a 2022 investigation by Sahan Journal and ProPublica into contracts for deed that found the agreements were often structured to require a six-figure balloon payment to pay off the rest of the home loan, which the attorney general asserts is illegal. The investigation 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. 

Prosecutors also asked Banken about his practice of asking clients to purchase homes through their personal businesses, including limited liability companies (LLCs). Banken testified that it’s easier for a business to receive approval to buy a home compared to a person, who must undergo income and credit score checks. Companies only need to be registered as a business and to offer a large enough down payment to purchase a home, he said.

Banken testified that he doesn’t look at a company’s revenue or expenses before approving a home sale, because many business owners are self-employed, and because he sees his contract for deed program as a way to help buyers with untraditional incomes who wouldn’t receive a traditional bank mortgage.

“They have the money to do it, they’ve obviously saved up a lot of money for the down payment,” Banken said of business owners who purchase homes through their companies. “They’ve started their own business, they run their own business, they’ve got a good head for business.”

Prosecutors showed jurors an email from Shannon Larsen, a contractor for Banken, that appeared to direct Omar to create a company before buying a home from Banken.

“Did you know people were creating LLCs just to purchase a home through your program?” Iris asked Banken.

“Some people would have created it really recently, but I don’t know if that’s just for the purpose of buying property,” Banken said.

Earlier in the day Monday, homebuyer Julian Fernandez Luchi testified through an interpreter that he and his partner wanted to buy a home in the spring of 2024. They wanted to move to a new neighborhood that was closer to his children. But when his partner found Banken’s program but didn’t qualify herself, Luchi testified, Banken proposed that they use Luchi’s contractor business to purchase the home.

Luchi testified that he met Banken in a parking lot and dropped off a check for $43,000 as the down payment for a $310,000 home in Brooklyn Center. But after Luchi and his partner closed on the home and it came time to make the first monthly payment, they learned that the terms of the loan had changed.

“We thought that it was going to be 30 years, but on paper we learned that we had to be able to pay it all in five years,” Luchi said. “We learned the loan had gone up to $348,000, and we couldn’t believe that we fell for it.”

Luchi and his partner were able to keep their home by refinancing it and putting the home under his partner’s name. But it took them more than a year of searching to find a bank that would help them, and the emotional and financial strain almost ended their relationship, he said.

“Emotionally, it’s very hard for me to explain because I almost lost my significant other, my relationship with her. Economically, that was all the money I had saved and now that money is gone,” Luchi told jurors while on the verge of tears. “In reality, it was something pretty ugly.”

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