Tiny home dream turns into $1.4m disaster

Two California brothers who promised homeowners affordable backyard homes are now facing a mountain of felony charges after allegedly pocketing more than $US1 million ($A1.4 million) from customers.

Austin and Colton Paulhus, co-founders of Anchored Tiny Homes, have each been slapped with 35 felony counts after prosecutors accused them of collecting hefty payments for construction projects that were never completed or in some cases, never even started, the California Post reports.

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Brothers Austin and Colton Paulhus face 35 felony counts each for allegedly charging customers for incomplete home construction projects. Picture: ABC10

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The Sacramento County District Attorney’s Office alleges the brothers collected more than ($A1.4 million) from customers across 13 projects without performing the promised work or providing materials.

Even more shocking, prosecutors claim more than $US653,000 ($A933,000) was diverted from company accounts to expenses and activities unrelated to construction projects.

The brothers each face 33 counts of diversion of construction funds, one count of conspiracy and one count of employee wage theft.

The Sacramento County District Attorney’s Office alleges the brothers collected more than $US1 million from customers across 13 projects without performing the promised work or providing materials. Picture: ABC10

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Their company’s spectacular collapse left a trail of furious homeowners across California, including elderly residents and families hoping to build backyard homes for ageing relatives.

Among them was Renee Kumamoto, who reportedly forked over $US168,000 ($A240,000) for a backyard home intended for her father, who was battling cancer.

But just two weeks after she made her final payment, the company shut down before construction had even begun, according to Realtor.com.

Another devastated customer, Mariah Dorn, publicly accused the company of taking $US266,000 ($A381,000) from her elderly parents, leaving them with an unfinished structure and a financial nightmare.

“They have scammed my elderly parents out of $US266k ($A381k) before I stopped my mum from making another payment,” Dorn wrote in a blistering July 2024 Facebook post.

She claimed subcontractors had gone unpaid for six months and were filing liens against her family’s property.

“They stopped all communication and we are just left with a shell of a home and out of money,” she wrote.

Their company’s collapse left a trail of furious homeowners across California, including elderly residents and families hoping to build backyard homes for ageing relatives. Picture: ABC10

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Dorn warned other Californians to steer clear of the company, claiming numerous families from Southern California to Northern California had suffered similar experiences.

The allegations sparked a massive investigation by the California Contractors State License Board, which received more than 200 consumer complaints spanning 18 counties.

Regulators revoked Anchored Tiny Homes’ contractor license in November 2024, and the investigation continued after the business ceased operations.

For retired nurse Jan Truelock, the ordeal began in January 2023 when she paid more than $US40,000 ($A57,000) — for a 450-square-foot (41.8 sqm) backyard home at her Roseville property.

She was promised construction would take about a year. Instead, 12 months later, her backyard remained completely empty. Truelock eventually sued for breach of contract and negotiated a $US25,000 ($A35,000) settlement, according to Realtor.com.

The allegations sparked a massive investigation by the California Contractors State License Board, which received more than 200 consumer complaints spanning 18 counties. Picture: ABC10

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“I’m very glad they are finally held accountable,” Truelock told the outlet, adding that she believes prison time would be an appropriate outcome.

But the brothers insist the company’s collapse wasn’t criminal.

In a lengthy December 2024 Facebook post, Colton Paulhus acknowledged the disastrous failure of Anchored Tiny Homes while vehemently denying wrongdoing.

“My last business failed. In a major way,” he wrote. “There’s nothing for me to hide. Nothing illegal was done.”

He blamed the company’s downfall on rapid expansion and insufficient funding.

“We simply grew too fast, scaled too quickly, and were not properly capitalised to support the growth,” he wrote. “I feel horrible for how many people were affected. The intentions were pure, the execution was not.”

Regulators revoked Anchored Tiny Homes’ contractor license in November 2024 and the investigation continued after the business ceased operations. Picture: ABC10

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Austin Paulhus’ Sacramento-based criminal defence lawyer, Blair Goss, similarly pushed back against the allegations in a statement to the California Post.

“A business failure is not proof of a crime. When a company fails and customers lose money, that is painful, but it does not necessarily mean anyone broke the law,” Goss said.

“The prosecution has made its accusations, but it has not yet shown us its evidence. Austin will be judged on his own conduct, not on a company’s collapse. The case returns to court January 12.”

Both brothers appeared virtually in court on October 14 but did not enter pleas. They are also seeking bankruptcy protection in federal court.

The California Post reached out to Colton Paulhus’ lawyer for comment.

Parts of this story first appeared in the California Post and were republished with permission.

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