By Katherine Clarke and Emily Glazer
Howard Lorber, chief executive of Douglas Elliman, was pushed by directors to resign after an investigation raised concerns on the board about a sexually charged work culture, according to people familiar with the situation.
Lorber, who has led the firm for two decades, stepped aside on Monday as chairman and CEO of one of the country's biggest real-estate brokerages. In a press release, the company said he had decided to retire. The 76-year-old executive didn't respond to requests for comment.
On Monday, the firm disclosed that another top executive, Scott Durkin, the president of its brokerage business, was terminated on Friday, according to a securities filing. The company didn't give a reason for his firing in the filing and Durkin didn't respond to requests for comment.
In recent weeks, Elliman's board formed a special committee in part to examine the firm's workplace and employee accusations of sexual assaults by two former brokers, brothers Tal and Oren Alexander, the people said .
The Alexanders, who were star Elliman agents before they left to start their own firm in 2022, have denied wrongdoing through their attorneys. "Their employer has also said, unequivocally, that no complaints were ever filed to human resources about the brothers," said Deanna Paul, an attorney for Tal Alexander.
The special committee's investigation was the second internal review in recent months; an earlier one conducted by an external lawyer for the company, Marc Kasowitz, was deemed insufficient by the board, the people said.
The board had concerns that Kasowitz and Lorber were too close for the review to be effective; the two are longtime friends. The New York litigator has represented Elliman over the years, along with a tobacco company that Lorber also has led.
"As longtime litigation counsel to Douglas Elliman, our firm was preparing to defend the company against potential claims," Kasowitz said in a statement. "Any suggestion that in doing so we would be less aggressive or effective in finding out the true facts because of our longtime business and personal relationship with Mr. Lorber makes no sense and is the exact opposite of the truth."
David Chene, a recent addition to the Elliman board, led the charge for the formation of the special committee, the people said. Chene joined the board in July when his firm, Kennedy Lewis Investment Management, invested $50 million in Elliman.
It couldn't be learned what the special committee found in its investigation, which went beyond the allegations against the Alexander brothers. The company's poor financial results contributed to the push by directors for Lorber to leave, some of the people said.
A spokesman for Elliman declined to comment on board deliberations and referred to a securities filing about the CEO change. The filing said that Lorber's resignation wasn't due to any disagreement relating to the "company's operations, policies or practices."
A second securities filing showed that Lorber's abrupt exit caused the cancellation of restricted shares valued at more than $4 million. He retained a roughly 4.2% stake in the company, according to the filing.
Allegations against the Alexanders and a third brother, Alon Alexander, who didn't work at Elliman, emerged earlier this year. Two women filed lawsuits accusing Oren and his twin, Alon, of rape. A subsequent lawsuit -- and accounts by women shared with The Wall Street Journal -- contained similar allegations against Tal. There are now at least four civil suits alleging sexual assault by one or more of the brothers. The allegations were being probed by law enforcement, the Journal reported in July.
Lawyers for the brothers have denied the allegations and vowed to fight the suits. In recent months, there has been an exodus of agents from the brothers' own brokerage firm, Official. Their business partners exited from the firm this past summer.
Elliman has nearly 7,000 brokers across the country and handled more than $34 billion in sales and rental transactions last year, including some of the priciest deals in New York City, Miami and Los Angeles.
Two top Elliman agents, "Million Dollar Listing Los Angeles" star Tracy Tutor and New York agent Jessica Cohen, have publicly said they believed the Alexanders spiked their drinks when they worked at Elliman. Their allegations were previously reported by the New York Times.
Tutor told the Journal that she believes that her drink was spiked by Oren Alexander at a restaurant in 2014 and that a fellow Elliman agent found her in the bathroom with Oren and had to pull him away.
A lawyer representing Oren and Alon Alexander didn't respond to requests for comment and hasn't commented on the allegations by the Elliman brokers.
Lorber's exit also coincides with a tough financial run for Elliman, which was spun off from tobacco company Vector Group in 2021. Since the end of 2021, Elliman's market capitalization has dropped from roughly $900 million to around $160 million, despite enacting significant cost-cutting measures.
At least one small investor, Brad Tirpak, had spoken out against Lorber, citing the company's shrinking market value. In a July letter to shareholders, Tirpak took aim at Lorber's salary, calling him a "part-time CEO" because he is also CEO at Vector, and lamented Elliman's handling of the assault allegations.
"Stockholders deserve to know how the assault and harassment claims were handled by management," Tirpak wrote.
Lorber has been an owner of Elliman since 2003, when he purchased the company for just under $72 million. Lorber's employment contract was due to expire at the end of the year.
Write to Katherine Clarke at Katherine.Clarke@wsj.com and Emily Glazer at Emily.Glazer@wsj.com
(END) Dow Jones Newswires
October 28, 2024 08:16 ET (12:16 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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