John Davis files a racketeering lawsuit against Keller Williams

Three months after a Texas judge sent former Keller Williams CEO John Davis’ $300 million fraud suit against the franchisor to arbitration, Davis is back with new racketeering claims.

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Three months after a Texas judge ordered John Davis to settle his $300 million fraud claim against Keller Williams — KW co-founder Gary Keller and former KW President Josh Team through arbitration — the former KW CEO has hit the panel of defendants with another lawsuit filed in the Western District of Texas.

The 58-page lawsuit filed on Wednesday reads the defendants, which now include Business MAPS Ltd. and Business MAPS Management LLC, allegedly inflated key profitability metrics, such as company sales and profits, to convince individuals to purchase Keller Williams Regions and Market Centers.

John Davis

John Davis

Once the franchisees signed a contract, according to the lawsuit, the defendants allegedly financially abused franchisees by requiring them to adopt KWRI’s preset market cap, which refers to the fees that agents pay their market centers, pay increasing technology fees and purchase “unneeded goods and services” from KWRI-owned and affiliated companies, such as MAPS training and coaching.

Franchisees were also allegedly required to purchase Keller’s books, which the suit reads was for “Keller’s own personal enrichment and self-serving needs.”

If franchisees attempt to step outside of the system, the suit claims KWRI and Keller ostracize them from the investor group — forcing them to sell their region or market center. However, the suit claims Keller and KWRI interfere with any attempt to successfully sell the region or market center at market value to qualified individuals, once again forcing franchisees to sell their assets to Keller or favored KWRI members at “extremely depreciated prices.”

The suit also claims that Keller abuses the company’s privately owned status, which means it does not have to publicly share 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,” the suit claims Keller said in an email.

In all, the suit makes two civil Racketeer Influenced and Corrupt Organizations (RICO) claims, one Sherman Act restraint upon commerce claim, one intentional fraud in the inducement claim and one breach of contract claim against the defendants. Davis is seeking a jury trial and said the total damages are in the millions.

“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. Unless stopped, Defendants will continue to subject franchisees to the same scheme for the purposes of substantial interest and profit.”

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Gary Keller

Keller Williams spokesperson Darryl Frost said the new filing is simply “another attempt by John Davis to smear Keller Williams in the press under the guise of a lawsuit.”

“Two federal courts previously directed him to bring his claims in arbitration,” Frost said in an emailed statement to Inman. “Mr. Davis has ignored those courts. We will continue to act professionally, follow the law, and aggressively defend these baseless claims.”

With this filing, Davis now has two lawsuits against Keller Williams.

The first lawsuit was filed in November 2022 and aims to recoup $300 million in damages stemming from Keller Williams Realty Fort Worth and Keller Williams Realty Johnson County CEO Inga Dow’s sexual misconduct allegations against the former CEO.  Davis said Dow’s claims resulted in lost career opportunities, losses from selling his businesses back to KWRI at allegedly reduced prices and pain and suffering.

Davis’ spokesperson Paul Omodt wasn’t available to give an update on the lawsuit, which was placed in the hands of a neutral, third-party mediator in March to resolve via arbitration.

“What it says is the right time to appeal is after arbitration,” Omodt told Inman after Davis lost an appeal to maintain a jury trial. “The truth will still come out. They’ll have to face the music at some point.”

In March, KW Market Center owners Colleen and Bart Basinski filed a lawsuit that aligns with Davis’ assertions.

The Basinskis said KW CEO Gary Keller, President Marc King and regional leaders Dan Holt and Colette Ching “maliciously interfered” with multiple business contracts that allegedly caused the couple to lose approximately $10 million in investments, disbursements, profits and income from their roles as market center owners, KWRI coaches and team leaders.

Omodt, who also represents the Basinskis, said Davis and the Basinski’s lawsuits outline the allegedly “sordid tale of Keller Williams Realty.”

“John Davis took a stand against the real estate giant and its founder Gary Keller with stunning allegations of fraudulent business practices, deceit, and operations ‘similar to a criminal enterprise’ in a suit filed earlier this year,” Omodt said in March. “Colleen and Bart are incredibly hard-working people who used the systems and tools set up by former CEO John Davis and found great success for themselves, their agents and ultimately Gary Keller.”

The Basinskis case is still open.

Read Davis’ latest lawsuit below:

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