California tiny-home builders face 35 felony charges after customers lose more than $1 million on unfinished projects
The dream of building a cozy backyard home without breaking the bank has turned into a financial nightmare for California homeowners who say they paid thousands of dollars for little more than empty plots and unfinished buildings.
Austin and Colton Paulhus, brothers who founded now-defunct construction company Anchored Tiny Homes, are facing 35 felony counts each over allegations that customers were charged for work that was never carried out.
Prosecutors allege the pair collected more than $1 million for 13 construction projects without performing any work or supplying materials, while more than $653,000 was allegedly diverted from company accounts for unrelated expenses.
The charges include conspiracy, diversion of construction funds and employee wage theft, according to a criminal complaint filed by the Sacramento County District Attorney’s Office.
Both brothers have appeared in court but have not entered pleas, and they are also seeking bankruptcy protection.
For customers who had hoped to create affordable extra living space for relatives or generate rental income, the legal proceedings offer a glimmer of hope after years of frustration.
Retired nurse Jan Truelock paid more than $40,000 in January 2023 for a 450sq ft accessory dwelling unit (ADU) in the backyard of her Roseville home.
She was told the project would take 12 months, but construction never began and her backyard remained stubbornly empty a year later.
Colton Paulhus, co-founder and former CEO of Anchored Tiny Homes, is now facing 35 felony counts over allegations that customers were charged for work that was never carried out
After becoming frustrated by delays and unanswered calls and emails, Truelock said she tried to cancel the contract but was offered just $5,000 in return.
She also alleged the company claimed to have spent $17,000 of her payment on materials that she never saw.
After hiring a lawyer and suing for breach of contract, she negotiated a $25,000 settlement, but still faced a substantial financial loss.
She subsequently hired another company, Imkat, to build the ADU, which she said is now beautiful.
Truelock welcomed the criminal case but told Realtor.com she believed accountability should mean prison time for the brothers if they are convicted.
She also voiced doubts that other customers would ever recover their money, saying she feared they might never discover exactly where their payments had gone.
The allegations extend far beyond one empty backyard, with the California Contractors State License Board receiving more than 200 consumer complaints across 18 counties.
The complaints involved customers who said they had paid substantial sums for ADUs that were never completed or, in some cases, never even started.
Both brothers (above, Austin seen in court) have appeared in court but have not entered pleas, and they are also seeking bankruptcy protection
Retired nurse Jan Truelock paid more than $40,000 in January 2023 for a 450-square-foot accessory dwelling unit (ADU) in the backyard of her Roseville home. She was told the project would take 12 months, but construction never began
The company’s contractor license was revoked in 2024, as the investigation continued following its collapse.
Katie Lucas paid Anchored Tiny Homes $211,000 in 2022 for a backyard property in San Leandro intended for her mother-in-law and grandmother.
Instead, she said, she was left with little more than a shell after work abruptly stopped, while contractors allegedly told her they had not been paid despite her settling invoices promptly.
Her attempts to contact the company went unanswered, and she discovered other unhappy customers after sharing her experience online.
The resulting Facebook group reportedly grew to more than 1,000 members at one point, as homeowners compared stories of stalled projects and mounting losses.
Another customer, Renee Kumamoto, paid $168,000 for an ADU intended to house her father, who was battling cancer, but said the company went out of business just two weeks after her final invoice was paid.
The collapse was particularly striking given the company’s previous ambitions, with co-founder Colton Paulhus discussing plans to franchise the business nationwide in 2023.
Anchored Tiny Homes announced it was shutting down in July 2024, with Austin Paulhus saying at the time that the company had grown too quickly and could no longer support demand.
The California Contractors State License Board received more than 200 consumer complaints across 18 counties relating to Anchored Tiny Homes
The brothers subsequently filed for Chapter 7 bankruptcy, while contractors and franchisees also alleged they had been left out of pocket.
The criminal complaint alleges that between January 2023 and July 2024, Colton withdrew $334,059 and Austin withdrew $319,700 from company accounts for expenses and activities unrelated to its projects.
Austin’s attorney, Blair Goss, told NBC Bay Area that his client was willing to cooperate with investigators, but declined to comment on whether he would testify against his brother.
The allegations have not been proven in court, and the brothers are due to return to court in January 2027.
For homeowners still staring at unfinished projects and depleted savings, however, the prospect of justice may offer little comfort unless it also brings a way to recover the money they lost.
The Daily Mail has contacted attorneys Blair Goss and Hendrick Crowell, who represent Austin and Colton Paulhus, respectively, for comment.
