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My wife, who treats HGTV like I do ESPN—meaning it’s the default channel for her when she sits down for a little TV viewing—occasionally gets sucked into some of those reality TV shows that emerged at the top of the housing boom. You know, the ones that show a speculator buying a fixer-upper, bringing in a crew to do a quick makeover, then flipping it for a quick profit. The Learning Channel created such a show (Flip That House) and HGTV had its own variation on the theme with Designed to Sell.
Last week, an Atlanta TV station ran a two-part investigative report on its nightly newscast claiming that the producers of the Flip This House, which airs on the A&E cable channel were duped when it broadcast a series of episodes showing the exploits of one Atlanta real estate investor, Sam Leccima, to buy, improve, and then flip different homes for a profit. The Atlanta station, Fox 5, makes a number of allegations about Leccima, including a claim that he didn’t actually own some of the homes as he claimed, and that the buyers in at least one instance weren’t real buyers—meaning the stated profits weren’t real. You can view the first episode of this two-part investigation here, and the second episode here.
I held off on posting news of this until I had a chance to allow Leccima and A&E to comment on the claims made in the Fox 5 broadcast. Leccima sent me an email saying that “on the advice of counsel, I will not be responding.” An A&E spokesman, Dan Silberman, sent a response that said A&E was “dismayed to learn of these allegations. A&E Television Networks is not a party to any of the transactions shown in Flip This House and has not received any formal complaints about the properties or sales. Based on these allegations, A&E is taking all episodes featuring Mr. Leccima off the air pending further investigation of the claims. After the second season of Flip This House, A&E decided to change direction and focus on different cast members, as we did after the first season, and we no longer work with Mr. Leccima.”
In the course of reporting this story, I came across an interesting web site, FlipThisLawsuit.com, which was created by a law student. It tracks the doings of the show and while I can't vouch for the credibility of all the claims, it's an interesting read.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.