Douglas Elliman’s California business caught in legal crossfire

Two Los Angeles Superior Court lawsuits, while ultimately filed this month for different reasons, offer similar claims against Douglas Elliman and some of its executives, accusing the brokerage’s California businesses of engineering kickbacks for select agents and rule-bending to the benefit of the Altman Brothers Team.

The brokerage isn’t sitting quietly by and smacked back in a lawsuit of its own last week.

The in-fighting in L.A. court places Douglas Elliman’s California business under a microscope amid scrutiny of its national operations with the abrupt departure of CEO Howard Lorber.

Former Newport Beach office Executive Manager of Sales Christina Carrillo and William Grasska, former president of Douglas Elliman’s Portfolio Escrow, each describe in their lawsuits incidents of credits not being reported on closing statements leading to inflated commissions for some agents.

Carrillo, who resigned earlier this month, also accuses the Altman Brothers — helmed by brothers Josh Altman and Matt Altman — of soliciting clients from other agents’ and brokers’ active listings. The Altmans are not named as defendants in any of the litigation.

When Carrillo’s concerns about the Altmans were brought up to Western Region CEO of Brokerage Stephen Kotler, she received pushback, her lawsuit said.

“Enough Christi. I have made millions from the Altman Brothers, so shut up. If other agents and brokers get fucked over, I don’t care, so be it,” the lawsuit alleges Kotler said.

Carrillo did not respond to requests for comment.

She’s suing Douglas Elliman of California and Douglas Elliman of California Financial, along with Kotler for sexual harassment and retaliation, among other allegations.

The brokerage and Kotler declined comment. Josh Altman did not respond to a request for comment.

Grasska alleges similar rebuke from the company when it came to allegations of managers at the brokerage’s Portfolio Escrow business being asked “to inflate a closing statement to allow the Altmans to earn more commissions,” the lawsuit said.

Grasska, who started Portfolio Escrow in 2009 and sold it a decade later to Douglas Elliman, did not respond to requests for comment.

The executive’s lawsuit is against Douglas Elliman’s California brokerage and financial subsidiaries, in addition to Kotler, escrow officer Melinda Topete, Western Region Chief Operating Officer of Brokerage William Begert and escrow officer Renee Mills. He’s suing for retaliation, breach of contract and defamation, among other accusations.

Topete and Mills did not respond to requests for comment.

Grasska’s suit includes broader allegations against his former escrow company, which he said in his lawsuit is currently under audit by the California Department of Financial Protection and Innovation.

A DFPI spokesman declined to comment on Grasska’s audit allegation.

Grasska alleges agents were incentivized with higher commissions and marketing spend increases to use Portfolio Escrow, without disclosure to customers.

Pushing back

Douglas Elliman views the situation differently and said in a lawsuit of its own filed last week in L.A. Superior Court that Grasska was under investigation for kickbacks, in addition to charging “expensive meals and lavish hotel stays” on his corporate credit card and creating a 1031 exchange company called Sienna Financial that violated his non-compete agreement with the firm.

Part of the investigation, the brokerage alleges, found that Grasska was working with one of Portfolio Escrow’s accountants to create fake invoices for services never provided.

“This scheme was designed to illegally obtain money belonging to Portfolio to pay off penalties assessed by the IRS” that Grasska needed to deal with a “personal transaction he carelessly ran through Portfolio,” the brokerage’s lawsuit said.

Added to that are accusations Grasska conspired with a “real estate broker that is now a star of a reality television show” to pay the broker kickbacks in exchange for business, Douglas Elliman alleges.

The firm is suing the escrow executive for breach of contract, civil embezzlement, fraud and negligence, among other complaints. It also hinted additional lawsuits “are being prepared against Bill Grasska’s co-conspirators,” while also stating in court documents the DFPI, California Department of Real Estate, Los Angeles Police Department and Internal Revenue Service have been notified. 

The California drama plays out against the background of the executive shakeup at Douglas Elliman, starting with Lorber’s departure last week. The company said in an announcement on the leadership change that Lorber was retiring, adding in a Securities and Exchange Commission filing the exit had nothing to do with any disagreement. The Wall Street Journal reported the CEO was pushed out amid a board probe into the brokerage’s broader workplace culture and accusations of sexual assault by former Douglas Elliman brokers and brothers Tal and Oren Alexander.

Michael Liebowitz now helms the brokerage as chair and CEO. Liebowitz announced more change within the ranks on Monday when staff and agents were informed of Douglas Elliman Real Estate CEO Scott Durkin’s immediate departure to “pursue new opportunities,” according to the email announcement reviewed by The Real Deal. A filing with the Securities & Exchange Commission states Durkin was terminated.

An attorney for Durkin, John Singer, told TRD this week Durkin “never at any time engaged in conduct justifying a termination, nor was he ever apprised that his employment was in peril.”

Read more

• Howard Lorber is retiring from Douglas Elliman
• Elliman terminates brokerage CEO Scott Durkin
• Elliman's board pushed Howard Lorber to resign over culture concerns

The post Douglas Elliman’s California business caught in legal crossfire appeared first on The Real Deal.