An internal investigation found that David Liniger, the founder and former CEO of RE/MAX, violated company policies by loaning millions of dollars to his eventual successor.
The investigation was launched last year after the company postponed the release of its 3rd quarter earnings when news of the loan first began to surface.
At the time, RE/MAX said that Liniger, who was the company’s co-CEO and chairman, allegedly loaned personal funds to Adam Contos, who was the company’s other co-CEO.
In November, Liniger and Contos confirmed the existence of a $2.375 million loan that Liniger provided to Contos, who then used the money to purchase a residence at a below market interest rate.
Liniger, who founded RE/MAX and led the company for 45 years, stepped down as CEO earlier this month. Contos then took over as CEO.
Contos was previously RE/MAX’s chief operating officer, but was promoted to co-CEO last year. He became the sole CEO when Liniger left.
But this week, the company announced the results of an independent investigation conducted by a special committee commissioned by the company’s independent directors and consisting solely of those independent directors.
The investigation looked into the loan as well as “certain other personal transactions, including cash and non-cash gifts, from David and Gail Liniger to Contos and others.”
The investigation found that Liniger did loan Contos the money in question when Contos was RE/MAX’s chief operating officer, but used his own funds, which was not a violation of company policy.
But neglecting to disclose the loan to the company was a violation.
“Although the loan, gifts, and other transactions between the Linigers and Adam Contos did not involve use of any corporate funds, the Special Committee concluded that these transactions created an actual or apparent conflict of interest,” Dick Covey, the company’s lead independent director, said.
“This, and the non-disclosure of these personal transactions to the company, violated company policies,” Covey added. “The board accepts that this nondisclosure was unintentional, and Adam has committed to repay the loan as promptly as possible.”
The investigation also found that Liniger was not compliant with certain company policies involving “workplace conduct,” but did not identify which policies those were or how Liniger violated those policies.
According to the company, Contos will continue to serve as CEO.
“The board looks forward to working with Adam and his senior leadership team to continue to build on RE/MAX's strong foundation and lead RE/MAX into its next chapter,” Covey said.
Liniger will continue to serve on RE/MAX’s board as non-executive chairman and “provide his insights and experience on the real estate industry and the company’s business,” the company said.
The board also “broadened the scope” of Covey’s responsibilities as lead independent director.
Additionally, as a result of the investigation, the company’s board and senior leadership will “implement remedial measures” in the coming weeks and months
According to the company, these measures include “enhanced corporate policies and practices related to gifts, loans, conflicts of interest and workplace conduct, and the reporting of such matters, and enhanced training on the responsibilities of officers and leaders related to these items.”