John Davis, a Coloradan who ran the real estate brokerage franchisor Keller Williams for a few years in the late 2010s, said the Austin, TX-based company “can only be likened to a criminal enterprise.”
In a lengthy new lawsuit filed in Texas, Davis makes use of Mafia verbiage — calling co-founder Gary Keller “the godfather of the syndicate,” for example — and pillories the company he ran as a “fraudulent, illegal business” with a “pyramid scheme-type playbook.”
“Keller runs Keller Williams Realty as a real-life version of the board game Monopoly, and Keller is always the one that gets to say, ‘Do not pass go,’” according to the former CEO.
Darryl Frost, a spokesman for Keller and Keller Williams, called those accusations “baseless” and “yet another attempt by John Davis to smear Keller Williams in the press.”
Davis, who grew up in the Vail area and still lives there, began working for Keller at a mortgage company in 1996, then climbed his way up to president of Keller Williams in 2015 and CEO in 2017. He left in early 2019. Davis said he quit. Keller Williams said he was fired.
His Aug. 29 lawsuit is the third case to emerge from his departure. Davis, Keller and the company were sued in 2021 by Inga Dow, a former Keller Williams franchisee who accused Davis of sexual assault, which Davis denies. The case is currently in arbitration.
Davis then sued Dow, Keller and the company for $300 million last fall, accusing them of “muddying up his reputation for personal gain.” That case is also in arbitration.
“Two federal courts previously directed him to bring his claims in arbitration,” said Frost, the spokesman for Keller and Keller Williams. “Mr. Davis has ignored those courts.”
In his latest lawsuit, Davis says that Keller and his company are running an “illegal and criminal-minded scheme” that “funnels hundreds of millions of dollars to Keller.”
The scheme begins, according to Davis, when Keller Williams encourages investors to put money into the company’s “regions and market centers,” which act as franchises.
Next, Keller Williams forces the franchisees to buy “worthless software and overpriced training materials,” as well as books that Keller wrote. They also must pay a technology fee to Keller Williams and use a company app rife with “glitches and bugs,” Davis said.
Then, Keller Williams lowers the commissions that centers must pay to Keller Williams. While ostensibly good for real estate agents — less money paid to the company is more agents kept — this lowers the centers’ profitability in the eyes of the company, according to Davis.
Finally, when profitability drops too low, Keller Williams declares a market center has defaulted on the franchising agreement and must be sold off. Davis alleges the centers are then bought by Keller and his friends at “criminally low” prices, costing investors millions of dollars.
As a former investor in market centers that had to be sold off, Davis said he was harmed by this scheme. He is suing for breach of contract and fraud. He also accuses the company of violating antitrust laws by using its “monopoly power” to coerce market centers, and violating federal racketeering laws by forcing the centers to pay onerous fees to the company.
Keller Williams, which has 189,000 agents on five continents, is also being sued by Colleen and Bart Basinski, who owned market centers. The couple alleges they were pushed out by Keller, who pledged to make them “destitute” because they are allies of Davis.
Davis is represented by New York attorneys Andrew Miltenberg and Kristen Mohr with the firm Nesenoff & Miltenberg, along with James Crewse of the Crewse Law Firm in Dallas.