TV's former `Mr. Flip It' sentenced to 4 years in jail
The ex-star of HGTV's “Flip It to Win It” show was sentenced Tuesday to four years in jail and ordered to pay $9.4 million for committing real estate and financial fraud against 11 victims, prosecutors said.
The sentence follows 58-year-old Los Gatos resident Charles “Todd” Hill's conviction last fall on grand theft charges, according to the Santa Clara County district attorney's office.
The television show centered on Hill, also known as “Mr. Flip It,” and his efforts to purchase dilapidated homes, fix them up and then sell them for a profit. Prosecutors said Hill instead spent millions on over-budget remodels, laundered profits and pocketed millions in fraudulently obtained money.
“Some see the huge amount of money in Silicon Valley real estate as a business opportunity,” District Attorney Jeff Rosen said in a statement. “Others, unfortunately, see it as a criminal opportunity — and we will hold those people strictly accountable.”
In one case, Hill diverted construction money for his personal use, prosecutors said.
Hill also created a Ponzi scheme in which he used funds supplied by an investor to buy homes to instead live lavishly, according to the district attorney's office. He hid the theft by creating false balance sheets and taking out loans using fraudulent information.
The Ponzi scheme was among a number of scams Hill carried out prior to the show.
Prosecutors said another investor toured a home for which he had provided $250,000 for remodeling and found it to be a burned down shell with no work done to it.
Victims who spoke at Tuesday's sentencing said they were still suffering financial and professional damages from the fraud, according to the district attorney's office.
Hill's victims were each out thousands or even millions of dollars, according to court documents. One of his victims, Max Keech, lost about $6 million after Hill submitted fraudulent invoices and manipulated financial records to embezzle money from Keech. Court records also showed that Hill owed around $236,000 to American Express for a credit card he opened under his wife's name; she since has filed for divorce.
Richard Pfaff, another victim in Hill's case, worked as a general contractor for Hill's home renovation business Silicon Valley Homes. Prior to Hill's TV show, the pair's home renovation business was only flipping one or two houses at a time, Pfaff said to investigators. By 2012, their business had grown to employ about 50 people and renovate 15 houses a month.
Pfaff said he believed they started losing money after “Flip It to Win It” started airing. Pfaff asserted that Hill spent too much money on fixing houses and branding himself as a TV personality while the business struggled to profit from sales.
Pfaff's statement revealed that Hill and his accountant, Susan Goodwin, were also behind on paying payroll taxes. According to Pfaff, Goodwin did not pay Pfaff's payroll taxes on Hill's request. Pfaff told investigators that Hill and Goodwin might have been “cooking the books” for many years to hide the fact that their business venture wasn't profitable. Pfaff was forced to pay $100,000 and still owes $80,000, he said in court documents, because Hill forfeited on his tax obligations.
The court records stated that Pfaff and Keech had since started working together to finish some of the outstanding houses that weren't finished. Despite financial records showing properties that were purchased, renovated and put up for sale, Pfaff asserted that all of the paperwork was faked by Hill and the houses he bought did not have any work done on them.
In addition to the jail term and restitution, Hill was ordered to serve 10 years of probation.