Following the ouster of Jay Huffman, the CEO of Multiple Listing Service of Northern Illinois, Inc. (MLSNI) who enriched himself and his consultant wife by founding an MLS information brokerage company, putting her in charge of it, paying her enormous consulting fees, and hiding the failure of the business from MLSNI's association-run board which largely funded the project, MLSNI -- one of the nation's largest MLSs -- has been in a state of flux.

It's more like acid reflux.

Some big-name brokers had left MLSNI in disgust and joined a competing MLS called MAP in order to put heat on Huffman. Once he stepped down, an attempt was made to restore cooperation and to come up with an idea that would satisfy members who no longer wanted emnity or to pay fees to two MLSs. A consolidation task force met in 2005 to discuss what to do and wound up recommending a broker-owned MLS, composed of the members merging from both MLSNI and MAP. The new entity, dubbed NEWCO, would become operational by the end of September, 2006.

But not everyone is on board with the idea, pardon the pun.

On September 11, 2006, the Board of Directors of MLSNI received a letter from attorney Brian F. Richards, Katen Muchin Rosenman LLP, representing five of the 10 members. The Aurora Tri-County Association of Realtors, Fox Valley Association of Realtors, Inc, Oak Park Board of Realtors, West Towns Board of Realtors and McHenry County Association of Realtors, which collectively own half the stock in MLSNI, feel that the MLSNI service is "being given away for nothing. We believe that several of the Board's members may have breached their fiduciary duties to the shareholders of the Company in connection with their review, evaluation and approval of the Transaction."

The complainants say that the Company gets too little voting rights in relation to its financial responsibility, including funding NEWCO with a line of credit. They represent half the voting rights in MLSNI, but in NEWCO, they'll have the ability to appoint only two out of 15 managers. Another bone of contention -- MLSNI is a for-profit entity (a point which got former board members into trouble for choosing profitmaking over member well-being, said some). The letter states that no due diligence was performed to ascertain the fair value of the Company, yet at least three members of the board were prepared to approve the Transaction on August 16, 2006. In short, the letter accuses the board of failing to "provide any legitimate business purpose for the Transaction."

The letter goes on to state that the true objective of the Transaction is to "transform the Company from an association-owned company to a broker-owned company." It goes on to demand that the board members "fulfill their fiduciary obligations to all of the Shareholders in connection with the Transaction ... ."

With the merger put on hold due to a pending lawsuit, cooperation isn't in the cards just yet.

Someone has put up a website called SaveOurMLS.info which accuses big brokers of trying to grab controlling interest in NEWCO. "The proposed plan would involve the merger of the current MLSNI with the smaller north suburban Cook County-based MAP along with new and uncertain rules of operation and only a limited broker vote. In effect, only 4 percent of the 6000 brokers in the metropolitan area would have a controlling interest on the governing board of the new, merged entity."

Firing right back, an anonymous group is sending out this message:

• "THE LIE: SAVE OUR MLS alleges that the forensic audit of MLSNI authorized by its board of directors in 2004 was a mere "cover" for three large brokerage firms to conduct radical changes in MLSNI operations and management."

  THE TRUTH: The audit was performed to investigate serious matters that led ultimately to the departure of the CEO. In addition, the management structure and election changes that followed the 2004 audit were approved UNANIMOUSLY by the Board of Directors and UNANIMOUSLY by ALL TEN of the Shareholders.

• THE LIE: SAVE OUR MLS warns of new and uncertain rules of operation.

  THE TRUTH: The operation is clearly set forth in documents that are being finalized for consideration by the board of directors and the shareholders.

• THE LIE: SAVE OUR MLS states that the combined business would have only a "limited broker vote," that it will operate at "the whim of a select few," and that "only 4 percent of the 6000 brokers in the metropolitan area would have a controlling interest in the governing board" of the combined business operation.

  THE TRUTH: Thirteen of the fifteen board seats are intended to be individuals nominated by brokers. Brokers from all geographical areas, small firms, large firms, franchise and non-franchise firms, can buy a preferred unit which entitles them to one vote per firm.

  Since each broker firm has one vote, "big brokers" cannot dominate the Board, and there are no Board seats "reserved" for "big brokers." Any broker can run for a board seat or submit a nomination, but to encourage that there will be a balance, there is a nominating committee that is expressly tasked with the job of seeking diversity among geographical areas, small firms, large firms, franchise and non-franchise firms.

  This is true broker democracy, with a goal to have individuals serving, whose concern is for the integrity of the real estate profession. This balanced group of directors, together with two directors representing MLSNI will be the decision makers in the business.

• THE LIE: While SAVE OUR MLS admits that discussions between MLSNI and MAP have gone on for over a year, it also alleges that the transaction is being "hurriedly pushed toward adoption" with "lack of discussion."

  THE TRUTH: In 2005, MLSNI created a task force with MAP to see if there would be interest in a business transaction with MAP. That task force included representatives from many of the Associations and the first written report of the task force was issued February 10, 2005. The task force process resulted in a Letter of Intent that was signed by eight of the ten MLSNI Association-shareholders.

  Those eight Associations were: Chicago Association of Realtors&Reg;, Realtor&Reg; Association of the Fox Valley, McHenry County Association of Realtors&Reg;, North Shore-Barrington Association of REALTORS&Reg;, REALTOR&Reg; Association of North West Chicagoland, Realtor&Reg; Association of the West South Suburban Chicagoland, West Towns Board of Realtors&Reg; and Three Rivers Association of Realtors&Reg;.

  Each of the eight Association-shareholders stated in this Letter of Intent that it had "... no serious reservations about moving forward with the planning process ... necessary to create definitive contracts ... so that the plan to combine MAP and MLSNI may be accomplished in an expeditious manner." In addition, representatives and lawyers of the larger REALTOR&Reg; boards met with representatives and lawyers of the smaller REALTOR&Reg; boards for many months in an effort to reach a common ground over the needs of all.

• THE LIE: SAVE OUR MLS alleges that "some" have sought to change the successful MLSNI "for their own purposes."

  THE TRUTH: Associations that hold approximately 88 percent of MLSNI's voting power and whose members constitute approximately 85 percent of the MLSNI subscribers and contribute approximately 85 percent of the listings to MLSNI want the transaction to proceed to a vote.

• THE LIE: SAVE OUR MLS states that the new organization would have a new subscriber fee structure.

  THE TRUTH: The organization is mandated to run at break even, just as MLSNI currently is mandated to operate.

• THE LIE: SAVE OUR MLS states that the new organization would end the existing association with the National Association of REALTORS&Reg; and its Code of Ethics and other user safeguards.

  THE TRUTH: The new MLS would not dissociate with NAR. The new entity will follow NAR Rules and Regulations just as MLSNI does.

• THE LIE: SAVE OUR MLS states that the transaction will "greatly restrict the ability of you and your firm to exist in the near future" and that most MLSNI members will not benefit from the consolidation of the two MLS systems.

  THE TRUTH: Expanding the MLS through the consolidation with MAP may create economies of scale and a better technology platform, but the real threat is what will happen if brokerage firms representing a large subscriber base totally withdraw from MLSNI should the transaction with MAP not occur. Were significant withdrawals to occur, the viability of MLSNI and other broker access to listings would be threatened. The refusal of all of the boards to recognize this threat is a dangerous denial of reality. THAT is the threat to your future.

• THE LIE: There has been a lack of disclosure from MAP concerning its assets and liabilities to be assumed, a lack of disclosure by some MLSNI board members about potential conflicts of interest from their, or their company’s affiliation with MAP, and antitrust opinions have not been sought or, at the very least, been made available to MLSNI shareholders.

  THE TRUTH: MAP has made disclosure of its assets and liabilities. Each Director member of the MLSNI Board of Directors has completed a "Disclosure of Potential Conflict of Interest," and the antitrust opinion has been sought, received, discussed and delivered to the Board of Directors and their attorneys.

"We feel it is the responsibility of Associations to act in the best interests of their members and ask Associations to keep that in mind as this process moves forward. This responsibility includes the dissemination of facts and complete disclosure of information to their Boards and membership," says the anonymous writer.

Sounds like some folks could use some of that famous Realtor arbitration. Fifty thousand Realtors will be affected by the outcome.