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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
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.”
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 said the original suit has yet to be sent to arbitration, which is the process of placing the case into the hands of a neutral, third-party mediator to find a solution.
Although the cases are on two separate tracks, Omodt said the new lawsuit does overlap with the first in giving a full picture of the alleged illegal business tactics at Keller Williams.
“Keller Williams has done their usual dodge and delay. We’re eager to get that scheduled because again, the more they dodge and delay, the more we find,” he said. “The civil RICO lawsuit brings in the other parties complicit in Gary’s scheme, and so that makes it beyond the initial suit between two parties. As we look at this more and more, we can build the case of a civil RICO. We have spent time analyzing the case and bringing it forward.”
Inman also asked Omodt about Colleen and Bart Basinski, two KW Market Center owners who filed a lawsuit in March 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 said the Basinskis case is still open and working its way through the courts. Although there have been no talks about the Basinskis joining in on Davis’ lawsuit as plaintiffs, the spokesperson said there is an opportunity for either lawsuit to reach class-action status as more people come forward.
“More parties [coming forward] could potentially make it a class action,” he said. “It really depends on how far people want to go. It’s kind of impossible to say at this point,” he said. “But we suspect that this pattern of coordinated behavior among the parties is bigger and broader than we realize.”
Read Davis’ latest lawsuit below:
This story was updated after publication with new statements from John Davis’ spokesperson, Paul Omodt.
