eXp's Shocking Loss: $1 Million Fraud Claims in Explosive Sexual Misconduct Case! What’s Next?

A California district court has delivered a significant ruling in a long-running sexual assault case involving eXp Realty, a prominent real estate brokerage, and its parent company, eXp World Holdings. In an order dated April 7, 2023, the U.S. District Court for the Central District of California denied a motion by eXp Realty and several defendants, including founder Glenn Sanford, to dismiss a crucial count in the plaintiffs' lawsuit that alleges fraudulent misrepresentation.

The case, which has been unfolding for over three years, began in early 2023 when the plaintiffs filed their initial complaint. In October of the same year, they added a claim of fraudulent misrepresentation, asserting that eXp Realty and its affiliates misled them regarding investigations into sexual assault allegations made by Fabiola Acevedo and others.

Count XIII of the third amended complaint contends that eXp Realty falsely claimed to have investigated the allegations against former agent Michael Bjorkman. However, evidence that emerged during the discovery phase suggested otherwise. Notably, a phone call involving Cory Haggard, eXp Realty's Senior Vice President of Agent Compliance, revealed that the firm was "not investigating" the claims. During depositions, both Haggard and another eXp executive, Jim Nuth, confirmed that the absence of an investigation was acknowledged in their discussions.

In its defense, eXp Realty argued that the plaintiffs did not meet the legal standard for fraud and pointed out that they had agreed to the company's claims of taking statements from alleged victims. The company cited the removal of Bjorkman and another accused former agent, David Golden, as evidence of its commitment to addressing such claims.

However, the court's ruling has reinforced the plaintiffs' allegations of misrepresentation, noting discrepancies in timelines presented by eXp Realty. The plaintiffs claimed they were informed that an investigation was initiated, despite internal communications indicating no such inquiry would occur. The court also addressed another crucial point: the plaintiffs were told that Bjorkman's employment had been terminated before he was actually let go, further supporting their fraud assertions.

The court concluded that the plaintiffs sufficiently demonstrated that these misrepresentations were made knowingly and with the intent to induce reliance on the statements. As a result, the court's decision to reject eXp’s motion to dismiss count XIII marks a critical juncture in the case.

Looking ahead, eXp Realty had previously requested additional time for discovery if the motion to dismiss the fraud claims was denied. The court granted this request, allowing for 60 more days for fact discovery to continue. Furthermore, both parties have been ordered to propose a joint schedule for all other deadlines within the next two weeks.

This ruling not only highlights the ongoing legal challenges faced by eXp Realty and its leadership but also underscores the complexities involved in handling allegations of sexual misconduct in corporate environments. As the case progresses, it will be closely watched by industry experts and advocates concerned about accountability and transparency in the real estate sector.