The suit accuses now ex-CEO Mike Mercurio of using association credit cards for personal purchases, inflating his vacation time and selling items that the association paid for on eBay.
In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
The San Diego Association of Realtors (SDAR) has cut ties with its CEO after a new lawsuit was filed accusing him of embezzling a fortune in association funds.
The suit was filed earlier this week against SDAR and claims Mike Mercurio artificially inflated his vacation time, bought luxury goods on the association’s dime then turned around and sold them for profit, and ultimately stole more than $1 million, according to local news station CBS 8, which first reported the case.
Four different executives-turned-plaintiffs — Heather Pena, Laura Martella, Jon Schwartz and Nicholas Hoffer — also allege in the suit that when they raised concerns about Mercurio’s behavior SDAR’s board fired them. Those firings then ultimately triggered their lawsuit against the association.
Reached for comment Friday, a spokesperson for SDAR told Inman in an email “that Mr. Mercurio is no longer an employee of the Greater San Diego Association of Realtors and that the Association is under new leadership.” Cory Shepard, a former SDAR director and the general manager of Coldwell Banker West, has taken over as the association’s CEO.
In the statement, SDAR declined to comment further on the case.
An attorney representing the plaintiffs in the case did not respond to Inman’s repeated requests for comment Friday.
However, in a statement to CBS 8, the plaintiffs’ said they initially reported “corruption and blatant theft” in an effort to protect employees and SDAR members. The statement indicates that an investigation into Mercurio took place, but that allegations of misconduct were “not as concerning as one would have hoped” to the board of directors. The plaintiffs also allege in the statement that they were “treated in a hostile and bullying manner,” including via retaliatory firings.
“The ultimate goal is to put an end to behavior that never should be allowed in any organization, by the CEO, or by the Board,” the statement continues. “This fraudulent behavior has been discussed for years and years, and yet no one did anything to stop it.”
The plaintiffs also sent a letter about the situation to SDAR’s board last year, according to CBS 8, which published the letter online this week. The letter claims that after looking into Mercurio’s financial activities, the plaintiffs found evidence of “fraudulent behavior which includes falsification of financial documents, personal use of company credit cards and monies, payroll fraud and tax evasion.” The letter also claims that the fraudulent behavior “has been going on for some time.”
According to CBS 8, the complaint further claims that Mercurio bought expensive watches and handbags with SDAR funds. He then allegedly ordered an assistant to sell the items on eBay and deposit the proceeds in his bank account.
Other allegations include adding 300 hours of vacation time which was then cashed out, and losing receipts for big-ticket items. The complaint suggests Mercurio may have been using SDAR funds to pay for his daughter’s tuition at a private Catholic high school.
Concerns about Mercurio’s use of funds first came up as early as 2013, according to CBS 8.
The new lawsuit is not the first time Mercurio’s actions have prompted legal action. Last year, Mark Cowan — formerly membership and compliance officer at SDAR — filed a lawsuit alleging the trade group used illegal means to “extort” agents to contribute to a political action fund. That case has to do with a mandatory “Real Estate Action Fund” fee that Mercurio allegedly added, against the advice of his legal team, to the association’s quarterly multiple listing service fee.
The new lawsuit seeks financial damages for the fired executives, and according to the plaintiff’s statement, the removal of “any and all corrupt individuals from the board who knew about or were complicit in these activities.”