Former Keller Williams CEO John Davis continues to go after his old firm.
Davis has filed a racketeering lawsuit against Austin-based Keller Williams Realty, alleging the brokerage committed fraud and financial abuse on the part of KW co-founder Gary Keller and former KW President Josh Team, Inman reported.
The litigation comes three months after a Texas judge ordered Davis to settle his $300 million fraud claim against the company. That lawsuit, filed in November 2022, sought to recover damages stemming from allegations of sexual misconduct within the company.
In the new suit, Davis accuses KW of inflating crucial profitability metrics to deceive individuals into purchasing Keller Williams Regions and Market Centers. Allegedly, once franchisees signed contracts, they were subjected to financial exploitation. Franchisees were required to adopt KW’s market cap, pay escalating technology fees and purchase unnecessary goods and services, like MAPS training and coaching, from KW-affiliated entities, the lawsuit claims.
Franchisees were compelled to buy Gary Keller’s books for his “own personal enrichment and self-serving needs,” it claims. Any attempts to diverge from this model allegedly resulted in ostracization by the company, forcing them to sell their assets under unfavorable terms.
Davis claims KW abuses its privately owned status to avoid transparency and having to disclose financial records through quarterly earnings reports.
“Because we’re private, we’re not under a microscope. We can do what we want, any way we want with no penalty,” Keller allegedly said in an email.
In the lawsuit, there are two claims of racketeer influenced and corrupt organizations, plus claims of Sherman Act restraint upon commerce, intentional fraud in the inducement and a breach of contract against the defendants, the outlet said. Davis wants to take the case to trial.
“Through this scheme, KWRI itself and the other Defendants suffer no loss, and only gains, from the harm caused to the individual owners,” the suit reads. “In total, Defendants’ scheme has caused franchisees to lose hundreds of millions of dollars in total.”
In response to the filing, KW spokesperson Darryl Frost said the lawsuit is an attempt to tarnish the company’s reputation. He vowed that the company would “aggressively defend these baseless claims.”
—Quinn Donoghue
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