A Minnesota jury just ruled that 'Shariah compliant' home deals were a scheme to defraud Muslim homebuyers

A Minnesota-area home seller named Chadwick Banken has been determined liable for defrauding East African Muslims in "contract-for-deed" scams that left his victims houseless and penniless.

"Me and my kids — we got justice at least," said Abdinoor Igal, who fell victim to one such scam and spent one year living in his truck as a result (1). He lost around $170,000 to a contract-for-deed scam from Banken.

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A jury found Banken civilly liable for violating the Minnesota Human Rights Act after he specifically targeted Minnesota's Somali Muslim community with "Shariah compliant" contracts.

The ruling comes at a time when Somali Minnesotans are facing increasingly racist rhetoric — for example, when a right-wing influencer claimed the community was involved in widespread daycare fraud (2).

Executive director of the Islamic Association of North America, Imam Yusuf Abdulle, said at a community gathering in Minneapolis that the recent racist attacks "are fueled by years of reckless rhetoric, political scapegoating, and media narratives that repeatedly associate Somalis with crime, danger and social problems."

Here's what to know about Banken's scheme.

Banken's 'contract-for-deed' scam

Many Muslims follow Islamic principles that prohibit them from paying or receiving interest (3).

"Islam's aim from any financial transaction is to maintain economic justice between those who have and those who have not," Wafiq Fannoun, president of Reba Free, LLC told the Federal Reserve Bank of Minneapolis. "It is essential in Islam that all parties involved (…) share the actual profit or loss of a venture, and that no one gets predetermined compensation such as interest."

Minnesota has a sizable Somali Muslim population which Banken targeted with his "Shariah compliant" contract-for-deed deals, which he said wouldn't come with interest.

Instead, he would give his Muslim buyers contracts that not only came with high interest rates, but also came with worse sales prices, down payments and monthly payments than what he offered other buyers (4).

Contracts for deed are not inherently illegal, but they can frequently be predatory (5). In a contract for deed, the seller keeps the house's legal title until the buyer has finished making all of the payments. The seller keeps the title while the buyer pays for things like property taxes, insurance and repairs.