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Two shareholders have filed go well with towards Glenn Sanford, Jason Gesing and 5 different eXp World Holdings board members for mishandling a sequence of sexual assault allegations, in line with studies revealed Wednesday.
The shareholders — the Los Angeles Metropolis Workers’ Retirement System and the Constructing Trades Pension Fund of Western Pennsylvania — mentioned Sanford and the board breached fiduciary duties by failing to make sure eXp had “reasonable reporting and information systems” to assist leaders “know about and prevent” assault and misconduct, in line with studies from Law360 and Bloomberg Regulation.
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Sanford and the Board’s alleged failings, the shareholders declare, led eXp World Holdings to expertise “significant harm” to its status and financial worth.
The Los Angeles Metropolis Workers’ Retirement System and the Constructing 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 submitting learn. “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 submitting 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 submitting highlighted three high-profile instances as proof of the management’s misconduct, together with two ongoing lawsuits towards former star brokers 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 one other lady listed as Jane Doe 3. It additionally mentions Reno-based agent Misty Carter’s now-dismissed harassment lawsuit towards former crew chief Chris Nevada, and allegations from a minimum of 25 different nameless folks.
Roberts and Acevedo’s fits argued eXp’s inaction was as a result of substantial monetary revenue Bjorkman and Golden delivered to the corporate by means of its revenue-share program.
Income share payouts are based mostly on the variety of productive brokers a present eXp agent or dealer sponsors (i.e. recruits). Sponsors are given a proportion of their brokers’ adjusted gross fee revenue (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 submitting mentioned Sanford, Gesing and board member Eugene Frederick have notably benefitted from the income share program through the years. In 2020, this system netted Sanford a bonus of $1.5 million and Frederick a bonus of $3.9 million. In the meantime, Gesing earned a bonus of $545,506 by means of this system in 2021.
The submitting mentioned Sanford has since “stopped formally participating” within the income share program; nonetheless, his compensation bundle has been up to date to offer him a money bonus that displays the distinction between his wage and the corporate’s income share quantity.
“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 submitting learn. “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 submitting additionally alleges Sanford and the Board has established a “culture of fear and retaliation” and thwarted any efforts to create a strong reporting and response system for brokers and workers experiencing sexual harassment or assault.
“The process by which complaints were handled at eXp is similarly opaque,” the submitting learn. “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.”
On account of Sanford and the Board’s alleged actions, the shareholders are requesting the defendants return the income, advantages and different compensation they made throughout the time of the alleged assaults, the creation of a viable sexual assault and harassment reporting system, and several other different damages, prices and bills associated to the lawsuit.
An eXp World Holdings spokesperson responded to the go well with, noting the corporate “has zero tolerance for abuse.”
“We take our responsibility to foster a safe and inclusive environment very seriously,” they mentioned in an emailed assertion 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.
Learn the total submitting beneath:
