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Two shareholders have filed suit against Glenn Sanford, Jason Gesing and five other eXp World Holdings board members for mishandling a series of sexual assault allegations, according to reports published Wednesday.
The shareholders — the Los Angeles City Employees’ Retirement System and the Building Trades Pension Fund of Western Pennsylvania — said Sanford and the board breached fiduciary duties by failing to ensure eXp had “reasonable reporting and information systems” to help leaders “know about and prevent” assault and misconduct, according to reports from Law360 and Bloomberg Law.
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Sanford and the Board’s alleged failings, the shareholders claim, led eXp World Holdings to experience “significant harm” to its reputation and monetary value.
The Los Angeles City Employees’ Retirement System and the Building Trades Pension Fund of Western Pennsylvania have been shareholders since 2019 and 2021, respectively.
“This case involves harrowing acts of surreptitious drugging and sexual assault of eXp real estate agents by the Company’s top agents or ‘Influencers,’” the 85-page filing read. “Since at least 2018, Defendants knew that executives and Influencers — including Michael Bjorkman, David Golden, Dave Conord, and dozens of others — were systematically drugging and sexually assaulting eXp agents at Company events.”
“Defendants chose to cover up this sexual misconduct, allowing it to continue and endangering the safety of the real estate agents who make up the lifeblood of the Company,” the filing continued. “… The Board ignored these reports and agents’ pleas for recourse. Instead, Defendants orchestrated a cover-up to protect the assailants, prioritizing the profits that inflated executive bonuses over agent safety and compliance with the law—as well as basic human decency.”
The filing highlighted three high-profile cases as proof of the leadership’s misconduct, including two ongoing lawsuits against former star agents David Golden and Michael Bjorkman, who allegedly drugged and assaulted former eXp agent Anya Roberts and former eXp recruits Fabiola Acevedo, Tami Sims, Christiana Lundy and another woman listed as Jane Doe 3. It also mentions Reno-based agent Misty Carter’s now-dismissed harassment lawsuit against former team leader Chris Nevada, and allegations from at least 25 other anonymous people.
Roberts and Acevedo’s suits argued eXp’s inaction was due to the substantial financial income Bjorkman and Golden brought to the company through its revenue-share program.
Revenue share payouts are based on the number of productive agents a current eXp agent or broker sponsors (i.e. recruits). Sponsors are given a percentage of their agents’ adjusted gross commission income (AGCI), which is “dynamically calculated each month to ensure that eXp Realty pays out and retains 50 percent of the company dollar (half of the 20 percent split with agents).”
The filing said Sanford, Gesing and board member Eugene Frederick have particularly benefitted from the revenue share program over the years. In 2020, the program netted Sanford a bonus of $1.5 million and Frederick a bonus of $3.9 million. Meanwhile, Gesing earned a bonus of $545,506 through the program in 2021.
The filing said Sanford has since “stopped formally participating” in the revenue share program; however, his compensation package has been updated to give him a cash bonus that reflects the difference between his salary and the company’s revenue share amount.
“The reason for Defendants’ cover-up is clear: Defendants prioritized their bonuses and boys’ club over the basic safety of the Company’s workers and compliance with law,” the filing read. “Their bonuses are calculated based on the revenue share income generated by the Influencers in their downline and can be very significant, as the Company generates approximately $28 million per month in revenue share income.”
“Realizing the upside potential of these ‘unlimited’ bonuses, however, depends on top eXp Influencers staying with the Company and continuing to generate revenue share income,” it added. “A top Influencer leaving the Company would be catastrophic for Sanford, Frederick, and Gesing’s revenue share because it would put at risk the revenue share income generated by that Influencer and all the agents in their downline.”
The filing also alleges Sanford and the Board has established a “culture of fear and retaliation” and thwarted any efforts to create a robust reporting and response system for agents and employees experiencing sexual harassment or assault.
“The process by which complaints were handled at eXp is similarly opaque,” the filing read. “For instance, the Diversity Director reported that there were no timelines for processing complaints. He was supposed to be the escalation point for complaints of sexual misconduct, and yet, he was told that he could not process the complaints.”
“He further confirmed that he was never allowed to know the process for anonymous emails. He was able to poke holes in the Company’s policies, and any time he challenged a policy, he was told that he did not understand the real estate business,” it added. “Whenever he tried to get a policy approved, he was met with pushback and told that’s not how things were done at eXp.”
As a result of Sanford and the Board’s alleged actions, the shareholders are requesting the defendants return the profits, benefits and other compensation they made during the time of the alleged assaults, the creation of a viable sexual assault and harassment reporting system, and several other damages, costs and expenses related to the lawsuit.
An eXp World Holdings spokesperson responded to the suit, noting the company “has zero tolerance for abuse.”
“We take our responsibility to foster a safe and inclusive environment very seriously,” they said in an emailed statement to Inman. “EXp Realty has zero tolerance for abuse, harassment, or misconduct of any kind — including by the independent real estate agents who use our services. The claims in this case stem from alleged assaults by independent real estate agents — which we handled with seriousness and deep respect, in line with our Company values, policies, and procedures.”
“The Company will continue to do its best to ensure we create a safe environment that provides an opportunity for our employees and agents to succeed,” they added.
Read the full filing below:
