Despite a declaration by the embattled Multiple Listing Service of Northern Illinois that a forensic audit had found “no evidence of any inappropriate activity whatsoever,” a group of its shareholders say many questions in the audit remain unanswered and has demanded to inspect its books and records.
In a letter sent to the MLS on Tuesday, the Realtor Association of West/South Suburban Chicagoland said it was concerned that the listing service’s officers and directors may have breached their fiduciary duties, and presented a list of 24 categories of documents it wants to see by Sept. 20.
“In 30 years of practice, I have never seen a corporation that was governed the way this one was,” said Philip Stahl, the lawyer for the suburban Realtors group. He said the MLS had failed to maintain standard record-keeping procedures.
The group, one of 10 local realty associations that own the listings service, is interested primarily in documents related to a dispute over the MLS’ investment in a business headed by Brenda Huffman, the wife of listing service Chief Executive Jay Huffman.
Stahl said that the investment was a conflict of interest for Jay Huffman and has caused the MLS to lose more than $2 million.
The suburban Realtors group, based in Downers Grove, said the documents are missing from a forensic audit of the listing service that had been requested by another shareholder and was conducted this summer by PricewaterhouseCoopers.
Among other items, the group wants to see minutes of board meetings, employment contracts and terms of loans or advances to the Real Estate Business Information Group, Brenda Huffman’s firm.
On Wednesday, Jay Huffman said he couldn’t comment on the Realtor association’s letter pending discussions with MLS lawyers.
“What I can tell you with absolute certainty is that the board of directors was fully advised” of the investment in his wife’s firm, he said. He added that a representative from the suburban Realtors group was among those who had voted for it.
On Monday, the MLS issued a press release that quoted a letter sent to all its members from its president, Loretta Alonzo, on Sept. 9.
“The audit findings included no evidence of fraud, financial mismanagement, misappropriation of funds or any inappropriate activity whatsoever by MLSNI staff, officers or board members,” Alonzo wrote. “We hope this helps to clarify some of these complex issues.”
“That’s a technically accurate statement,” Stahl said. “But Pricewaterhouse’s job was to dispassionately present the facts. Questions like fraud and misappropriation are judgmental and require the application of law to fact, and Pricewaterhouse wasn’t retained to do that.
“What Pricewaterhouse reported shows that there were substantial failures to comply with corporate formalities and to conduct the affairs of the MLS in a way they should have been conducted,” Stahl said.
