John Davis’ RICO suit includes new claims against KW execs

In the filing, Davis and Herfel claim that a Keller Mortgage employee accused John Keller of sexual misconduct, and that the allegations were then covered up by the company’s general counsel Stacie Herron. According to the filing, Gary Keller gave the accuser $1 million of his own money to pay her off and then gave Herron a $1 million bonus and a promotion to interim COO for carrying out the alleged cover up. 

Davis’ own legal battle with his former employer began because of sexual misconduct allegations made against him by Inga Dow, the CEO of various Keller Williams offices, in 2022, three years after he left the firm. Davis sued in an attempt to clear his name. The lawsuit was dismissed after going into arbitration in March 2023. 

Davis then filed a racketeering lawsuit against Keller Williams in August 2023 and refiled in December 2023. The suit makes claims of financial impropriety against Gary and John Keller, former KW president Josh Team, Business MAPS Ltd., Business MAPS Management LLC, 72Sold, Johnathan Dupree, Marc King, Jason Abrams, Matt Green, William Soteroff, KWx, Livian and KW Southwest Region as defendants. According to the initial complaint, after franchisees signed a contract, the defendants then required franchisees to adopt KWRI’s present market cap, which is the fee agents pay to their market centers. Davis alleges that these fees went to increasing technology fees and the purchase of “unneeded goods and services” from KWRI-owned and affiliated companies, such as MAPS training and coaching.

The latest slate of allegations take things a step further, claiming that Gary Keller, John Keller, Stacie Herron, Josh Team and Mark Willis “misappropriated, diverted and embezzled” millions in fees through KWx. Additionally, the plaintiffs allege that Team received $10 million in kickbacks, and that Mary Pfluger, Gary Keller’s wife, gave Jonathan Dupree, the southwest regional director, an off-the-books check for agreeing to the market cap cut directive given by Gary Keller. 

In addition to these allegations, the filing also notes that the parties have not been able to agree upon an arbitrator. 

In a reply brief, attorneys from Akin Gump Strauss Hauer & Feld, the counsel for the defendants, claimed that the plaintiffs are using the court and public filings “to pursue their personal vendetta and disparaging campaign against Defendants must end.”

“The court has ordered arbitration two times, and Plaintiffs have circumvented those arbitration orders and continue to refuse to resolve their disputes in private, confidential arbitration despite representing to the Court that they would do so,” the reply states.

Both parties have continued their posturing, with Keller Williams’ legal team asking the court to withdraw the arbitration demand and strike it from the court record, which the plaintiffs have agreed to do after an arbitrator is selected. The defendants’ counsel has also filed a motion asking the court to hold Davis in contempt due to alleged efforts to mislead the court. 

On Tuesday, the parties filed a joint status report, notifying the court that they had exchanged names of additional Texas arbitrators, but thus far have been unable to come to an agreement on an arbitrator. 

If the parties are unable to agree on which arbitrator to use, they said that they expect to submit a proposed process for arbitrator selection for the judge to appoint an arbitrator. 

“This is yet another attempt by Mr. Davis, through unfounded and sensational allegations under the guise of a legal filing, to continue his public smear campaign against Keller Williams and its leadership,” Darryl Frost, a spokesperson for Keller Williams, wrote in an email. “These untrue personal attacks represent an ongoing effort to generate attention for his baseless and false claims. While we continue to address this matter through the proper legal channels, our focus remains on running our business.”