Delaware’s famous Court of Chancery, now 234 years old, usually hears staid civil business dispute cases turning on dry, complicated, sleep-inducing contract language and mind-numbing lawyering. But every once in a while, a case pops up like Los Angeles City Employees’ Retirement System, on behalf of eXp World Holdings Inc. v. Glenn Sanford, Randall Miles, Dan Cahir, Jason Gesing, Eugene Frederick and James Bramble.
The shocking claim: To enhance their personal wealth, leaders of the parent company of eXp Realty, a big publicly traded real estate brokerage incorporated in Delaware, largely turned a blind eye to allegations some of their biggest agents sexually assaulted fellow agents in Las Vegas and other cities. A judge’s recent ruling in Wilmington will allow the case to proceed.
Of course, most everything, especially liability, is being denied. But in a big way the eXp 6, as I might call the half-dozen defendants, still become the newest candidates for my long-running list, It Didn’t Stay Here. The criterion is simple: people in trouble elsewhere for something that happened in Las Vegas. The list is my New to Las Vegas rebuttal to “What Happens Here, Stays Here,” for many years the famous marketing slogan of the Las Vegas Convention and Visitors Authority. You can see a list of the nominees nearby. A lawsuit like this is definitely trouble.
The six board member or officer defendants, led by eXp founder and CEO Sanford, are not accused of sexually assaulting anyone. Instead, they are accused of countenancing the activities of agents because of personal financial considerations. The plaintiff is a California public employee pension fund owning shares of eXp and alleging a grievous breach in fiduciary duty and corporate governance that damaged the company. The case is styled as a shareholder derivative action. That means any recovery from individual defendants would go to the corporation, and, of course, the plaintiff lawyers representing it.
Only one Vegas connection is specifically referenced in the 92-page opinion by Chancellor Kathaleen McCormick. Three eXp agents alleged that two top agents with connections, Michael Bjorkman and David Golden, drugged or raped them “during an August 2020 recruitment event in Las Vegas.”
But a devastating New York Times exposé from 2023 revealed more of the picture. The August 2020 event was at the Encore Resort on the Las Vegas Strip. eXp operates on a multi-level marking model, in which agents recruit other agents and get a portion of their future earnings. So there is a lot of wining and dining. According to the Times account, one agent victim, who allowed the paper to identify her, said she was drugged by Bjorkman and Golden but avoided sexual assault because of the presence of friends. Another woman, who stayed anonymous, told the paper she was sexually assaulted by Bjorkman.
Bjorkman earlier had been charged with criminal sexual assault but the Clark County District Attorney’s Office in Las Vegas eventually dropped the charges, the paper reported. Golden was not criminally charged. According to The Times, both men had been the subject of complaints going back decades, and civil lawsuits. (They are not parties to the Delaware litigation.)
Chancellor McCormick’s opinion allowing most of the litigation to proceed assumed the plaintiff’s stated facts are true for the purpose of deciding whether there’s a viable case. Here’s how she summarized the pleading:
The defendants harmed the company by allowing their agents to be harassed, drugged, assaulted, and raped at company events. Such defendants benefited financially from retaining the perpetrators and actively covered up their conduct. Others failed to respond in good faith to red flags notifying them of the company’s rape culture.
The opinion clearly lays out a withering account of how the company ignored its code of ethics and made a mockery of a written vow of “the highest standards of business conduct.” It said the assaults dated back to at least 2018, exploded on social media posts and by 2020 were being reported in writing to eXp officials. One 11-page memo anonymously sent to some of the defendants alleged secret recordings of compromised women and blackmail. Reports were left out of the minutes of board meetings. Officials eventually forced Bjorkman and Golden out, but allowed them to continue receiving a revenue stream.
Sanford, now 57, founded eXp in 2009 during the Great Recession, relying heavily on computer cloud software and an Amway-like recruitment scheme to develop what has become an army of 90,000 agents (including maybe 1,000 in Nevada), all independent contractors. Based in Bellingham, Wash., the organization developed a hard-working, hard-partying culture—much of that, it seems, centered on recruiting events in Las Vegas, including Caesars Palace and Wynn Las Vegas. Sanford took the company public in 2018. In 2022 Forbes ranked him at No. 2,578 on its list of the world’s billionaires, with an estimated net worth of $1 billion. He owns about 25% of the outstanding shares.
But since 2021, eXp World Holdings shares adjusted for splits and dividends have fallen 88% in value. That’s what can occur when things happen here, in Vegas.