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EXCLUSIVE: Lawsuit Alleges Appraisal Institute Has Given States Fraudulent Test Results For Years
National
March 29, 2025 | 4:27 p.m. ET Matt Wasielewski, National
A former executive of the Appraisal Institute, which manages certifications for the appraisal industry, sued the nonprofit, alleging widespread fraud stretching back to at least 2020.
Alissa Akins, the former director of education and publications at the agency, alleged in a civil case that the nonprofit knowingly misrepresented test results for mandatory continuing education to state regulators. Akins said she identified the problem and suggested an action plan to fix it, but she alleges leadership tried to force her out of the agency before ultimately firing her.
“Plaintiff was terminated from her job for reporting and refusing to participate in an ongoing fraud being committed by her employer,” Akins' attorneys wrote in the suit, filed in Chicago civil court Friday. “The fraud was occurring against both individual consumers and multiple state regulatory authorities, including the Illinois Department of Financial and Professional Regulation.”
The Appraisal Institute failed to account for differing state standards when reporting test results, a lawsuit alleges.
The Appraisal Institute and its senior executives are accused of covering up a faulty test-scoring system for the Uniform Standards of Professional Appraisal Practice, which includes exams that appraisers are required to periodically take to maintain their certification.
The test is the same across the country, but each state has its own threshold for passing. Akins alleges the Appraisal Institute ignored state-level requirements and instead used a single standardized score to determine whether a student passed.
In states with a lower score threshold, the trade group reported some students had failed when they had actually passed. In states with a higher threshold, state agencies were told that some students passed that should have failed.
The Appraisal Institute didn’t respond to a request for comment Saturday.
The suit says that Akins uncovered the issue in September 2024 and then realized the system had been in place and producing fraudulent test results since at least 2020. Executives at AI allegedly were aware of the misreporting, and when Akins flagged it, she was told the situation was a “don’t ask, don’t tell type of policy,” according to the suit.
“I would characterize their failure to fix the many problems my client found as laziness,” Jordan Matyas, an attorney at 1818 Legal representing Akins, said in an interview with Bisnow Saturday. “I don't believe the intent was to deceive the state. It was that they did not want to put in the time and effort to fix the problems.”
After executives allegedly refused to address the issues, which impacted tests administered by the Appraisal Institute as well as third-party contractor Pearson, Akins asked that her signature be removed from course completion certificates.
The suit says that on Oct. 30, the day after her protest, Akins received a text message from John Udelhofen, AI’s interim CEO, saying he was working on an employment separation package for her.
When Akins asked if she was being fired, she was told she wasn’t, but that Appraisal Institute Vice President Craig Steinley would “make it hell for you as long as you stay.”
Akins notified the company’s human resources department of the erroneous test scores and the ongoing disagreement Oct. 31. She was fired Dec. 10.
In her suit, Akins is seeking back pay, punitive damages and attorney’s fees, but Matyas said the case was brought more to shed light on the situation.
“While money damages are important to my client, what is more important to her is that the public and state regulators be made aware of AI’s practices,” Matyas said.
The lawsuit comes amid another high-profile leadership fracas at AI. In September, the nonprofit's board of directors forced out CEO Cindy Chance in what she described as a “secret board meeting.”
Chance had been in the role since August 2023 and said after her firing that she was pushing for reform at AI that would have increased its independence from the corporate sector where it offers oversight.
Since being fired, Chance has become an outspoken critic of AI and The Appraisal Foundation, a separate organization that sets the standards for appraisers that form the basis of the curriculum for AI and other test providers.
In a statement to Bisnow Saturday, Chance said she got a similarly listless response when flagging other issues to the board and senior management.
“The issues cited in Alissa’s complaint align with my experience there,” she said. “I was hired to turn the organization around and hired her in turn to do the same. I reported serious issues with education and problems of a similar magnitude in other areas to the board.”
AI has faced budget constraints in recent years, running a $1.2M deficit in 2024, although President Paula Konikoff wrote in a blog post last month that AI remained financially stable and had sufficient reserves.
She said the organization, which along with McKissock administers the vast majority of continuing education courses for appraisers, would work to close the budget gap by expanding strategic growth initiatives and increasing enrollment in its recently introduced online appraisal training course.
“My client’s initial research found that there are people who got licensed by states based on the test results provided by AI,” Matyas said. “Had AI reported the results properly, these individuals would likely not have gotten licensed.”
USPAP is updated by The Appraisal Foundation biannually, and appraisers have for years chafed at what some see as arbitrary continuing education requirements to test appraisers on esoteric changes to policies that have very little real-world impact. USPAP and the testing regime were described as “a money-generating machine” by one insider who spoke to Bisnow for a 2024 investigation.
Contact Matt Wasielewski at matthew.wasielewski@bisnow.com
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