Keller Williams Legal Battle with ex-CEO Turns Uglier

3 March 2025

A yearslong legal battle between Keller Williams Realty and its former CEO John Davis just got even messier.

Davis accused executive vice chairman John Keller, son of Keller Williams founder Gary Keller, of sexual misconduct. The accuser was fired after reporting the incident, Davis said in a filing Jan. 27 — less than a year after Davis himself was cleared of sexual misconduct allegations.

The filing is the latest episode in a suit filed by Davis and former Arizona franchise owner Jesse Herfel in August 2023; they accused the nation’s largest real estate brokerage by agent count of orchestrating a scheme to defraud franchisees, devalue their businesses and seize control of their operations at below-market prices. The lawsuit is in the U.S. District Court for the Northern District of Texas.

The Jan. 27 filing alleges the firm spent $2 million suppressing the sexual misconduct complaint; the accuser allegedly got a $1 million payout from Gary Keller, and chief legal and administrative officer Stacie Herron allegedly received a $1 million bonus for allegedly helping “to cover up the allegations,” enabling John Keller’s continued advancement within the company.

The filing comes in the form of a demand for arbitration, a conspicuous vehicle, since Davis refused to engage in arbitration on a previous lawsuit against the company for over a year.

The sexual-misconduct allegation is one of many new accusations, or elaborations on previously purported wrongdoing, made in the 84-page January filing.

The former executives also accused Gary Keller of saying, “Why buy what we can steal?” That quote is included in the initial lawsuit, but the latest filing elevates it from a passing remark to a company-wide ethos guiding its franchise acquisition strategy. It claims the phrase became shorthand for Keller Williams’ alleged systematic efforts to force distressed sales of franchise regions and market centers to the firm and his allies at cut-rate prices — Gary Keller’s “personal motto,” Davis claimed in the complaint.

Attorneys for the firm characterized Davis’ allegations as “untrue personal attacks” and accused him of engaging in an “ongoing effort to generate attention.”

Davis, Herfel and their attorneys only added allegations as soon as they were aware of them, Davis’ head attorney Andrew Miltenburg said.

The Keller Williams team requested the document be withdrawn and stricken from the public court record. While Davis’ attorneys said they stand by the filing, they agreed to strike the filing once an arbitrator is selected to save the court’s time.

“One of Gary Keller’s tactics to escape liability and avoid being accountable for his actions is by delaying cases, distracting the public and isolating plaintiffs,” Miltenburg said.

The filing also included new claims that deepen Davis’ prior accusations of financial misconduct. Specifically, he accused the firm’s executives of treating agent technology fees as a personal slush fund. Former KW president Josh Team allegedly received $10 million in kickbacks, while CEO Mark Willis and other senior leaders allegedly profited from fees collected from franchisees, the filing said.

It also alleges a previously unreported scheme involving a personal payment from Gary Keller’s wife, Mary Pfluger, to southwest regional director Jonathan Dupree — an off-the-books check allegedly to compensate Dupree for allegedly complying with Keller’s cap-cutting directive, which had financially weakened his region

Davis’ attorneys presented the scheme as evidence of the company’s coercion tactics and efforts to conceal its devaluation strategy.

This lawsuit is the second filed by Davis in the saga. He sued the firm in October 2022, making similar claims. Keller Williams attorneys say the suit flouted an agreement to resolve the claims exclusively by binding arbitration.

That first suit was sent to arbitration in March 2023. Davis filed the second suit in August 2023.