Keller Williams’ Legal Saga Heats Up

The trail of legal drama attached to former Keller Williams executives keeps getting longer.

The latest claims target Joshua Team, once the chief innovation officer and president of the Austin-based brokerage, accusing him of accepting more than $10 million in kickbacks while at the company, according to documents filed with a Texas civil court in September and first reported by Inman.

Team, through attorney Jacob Kring, has denied the allegations.

Now the president of Serhant, Team is among a group of former leaders at Keller Williams, including co-founder Gary Keller and former CEO John Davis, who have spent two years wrapped up in a series of lawsuits including claims of sexual misconduct, fraud, racketeering and embezzlement. The brokerage is also facing two class-action lawsuits over its profit-sharing program, with former agents accusing the firm of unjust enrichment.

Though the lawsuits alleging sexual misconduct and fraud have since been dismissed, the firm, Keller and Team are still fighting the suit accusing the brokerage of financial abuse, which was filed by Davis last year.

The legal action has followed the former executives beyond the brokerage. Davis stepped down from his role at the company in 2019, citing an argument with Keller who took over his post, according to a lawsuit he filed in 2022. By then, Keller had already vacated the chief executive position as part of a broad corporate restructuring plan. Team served as the firm’s chief innovation officer for nearly four years before his promotion to president in 2019. He left the company in 2021 and joined Serhant two years later.

Darryl Frost, a spokesperson for the firm, has previously denied the allegations, referring to them as “baseless” and an attempt by Davis to “get more press coverage.” Frost declined to comment on the new claims against Team.

Team’s lawsuit

The allegations against Team, which are separate from those against Davis, arose in a counterclaim filed as part of a breach of contract dispute between business referral firm East Media Consulting, and Aika LLC, a software development company that handled projects for Keller Williams between 2016 and 2023. Aika claims Team set up East Media with the Texas Secretary of State in 2016.

According to the complaint, Aika, founded by Team’s former coworker Jason Tomlinson, agreed to pay East Media a portion of its profits in exchange for client referrals. But East Media claims the arrangement fell apart at the end of 2022, when the software firm allegedly stopped making payments to the consultancy and refused to turn over its books.

In response to the lawsuit, Aika denied the claims and instead argued that the contract between the two firms was never valid, as it was allegedly used by Team, who was not initially a party to the lawsuit, to steer business from Keller Williams to Aika and later earn a share of the profits under the agreement with East Media.

Team’s attorney moved last week to dismiss the claims against him, calling the counterclaim “a gross abuse of the court system” and arguing Aika “manufactured false stories in its pleadings and then recycled false stories” to avoid paying out.

“After operating for seven years under the parties’ agreement, Aika fabricated a dramatic story that Aika’s years of payments were actually bribes,” according to the motion, which refers to Aika’s argument as “bizarre logic.”

Team’s attorney claimed that, during discovery, Aika denied that it paid illegal kickbacks and the payments weren’t a crime, contradicting its argument that the contract was illegitimate because it was illegal.

“It’s unfortunate that a Defendant can make unfounded allegations without evidence and then immediately retract them in court, yet still attract attention from media sources,” Kring, an attorney for Team, wrote in a statement.

Team’s attorney also pointed to Aika’s former attorney, Lee Foster Christie, stepping back from the case for “ethical reasons.” Last month, the Texas State Bar indicated it would conduct an investigatory hearing into the matter, according to a document shared with The Real Deal.

Frost, a spokesperson for Keller Williams, and Greg Westfall, an attorney for Aika, declined to comment on the claims.

Timeline of legal action

Legal turmoil around executives at the firm started in 2022, when a former franchisee sued Davis, Keller and other leaders and entities with Keller Williams. Inga Dow alleged she suffered years of sexual harassment and abuse and that the brokerage failed to take action and retaliated against her for reporting the behavior.

Among her claims, Dow alleged that female employees at the brokerage were encouraged to perform “sexual favors or acts for male counterparts and/or top clients.” She also claimed Davis propositioned her for sex, and she faced retaliation if she refused.

About a year after Dow filed her lawsuit, a judge ordered her to drop her claims against most of the defendants, including Keller. She filed an affidavit the next month clearing Davis, saying in the document that she “wrongly accused [Davis] of misconduct.”

“I fully retract all of these statements and apologize to Mr. Davis,” Dow included in the affidavit.

Months after Dow filed her lawsuit, Davis sued her, Keller, Team and the brokerage in what he described as an attempt to “restore his reputation and clear his good name.” The complaint claims Davis was owed $300 million in damages for lost career opportunities and for having to sell his businesses at a loss.

Davis alleged Dow informed Keller Williams of the accusations and that Team and Keller withheld the information from him as a negotiating tactic when he was attempting to offload his market center regions to Keller Williams. He claimed the brokerage, through Team and Keller, rejected a proposed “highly profitable” deal for the regions, forcing him to sell them for “tens of millions of dollars less.”

But a judge ordered Davis to resolve the lawsuit through arbitration. He struck again in another lawsuit filed last August, accusing the brokerage of racketeering that was aided by Keller and Team. In the complaint, Davis claimed the brokerage tricked people into buying regions and market centers using inflated profitability metrics and requiring them to purchase “unnecessary goods and services” after signing franchise contracts.

Four months after filing the lawsuit, Davis updated the claims to include accusations of embezzlement and added other Keller Williams executives to the list of defendants. The amended complaint accuses Keller of using funds collected from franchisees for his own business ventures. Keller Williams has denied the allegations.

In August, the judge presiding over the case ordered Davis and the defendants to enter arbitration. According to the order, the defendants had previously argued the lawsuit was just a “repackaging” of his earlier claims against Dow as he “attempted to evade arbitration.”