What was meant to be an affordable way to add a comfortable backyard home has become a devastating financial ordeal for California homeowners who say they paid thousands of dollars for vacant lots, partial structures and promises that were never fulfilled.
Austin and Colton Paulhus, the brothers behind the now-defunct construction firm Anchored Tiny Homes, each face 35 felony charges over claims that customers were billed for construction work that was not completed.
Prosecutors say the brothers collected more than $1 million for 13 projects without carrying out the promised work or providing materials. They also allege that more than $653,000 was taken from company accounts and spent on matters unrelated to the construction business.
The criminal complaint filed by the Sacramento County District Attorney’s Office includes allegations of conspiracy, construction-fund diversion and theft of employee wages.
Both men have appeared before a judge but have not entered pleas. They are also pursuing bankruptcy protection.
For customers who planned to create housing for family members or earn rental income from accessory dwelling units, the prosecution has brought a measure of hope after years of delays and financial strain.
Retired nurse Jan Truelock paid more than $40,000 in January 2023 for a 450-square-foot accessory dwelling unit, or ADU, behind her home in Roseville.
The project was supposed to be finished within 12 months. Instead, a year later, construction had not started and her backyard remained empty.
Colton Paulhus, co-founder and former CEO of Anchored Tiny Homes, faces 35 felony counts over allegations that customers were charged for construction work that was never completed
After repeated delays and unanswered phone calls and emails, Truelock said she attempted to end the agreement. She was offered only $5,000 in return.
She further claimed that Anchored Tiny Homes said $17,000 of her payment had been used to purchase materials, although she never saw those supplies.
Truelock hired an attorney and filed a breach-of-contract lawsuit. She eventually reached a $25,000 settlement, but remained significantly out of pocket.
She later turned to another builder, Imkat, to complete the ADU and said the finished unit is now beautiful.
Although Truelock welcomed the criminal case, she told Realtor.com that a conviction should result in prison sentences for the brothers.
She also questioned whether other customers would ever recover their money, saying many may never learn what happened to the payments they made.
The complaints reach far beyond Truelock’s property. The California Contractors State License Board has received more than 200 consumer complaints from 18 counties connected to Anchored Tiny Homes.
Many customers said they paid large sums for ADUs that were either abandoned before completion or never began at all.
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Both brothers, including Austin Paulhus pictured in court, have appeared before a judge without entering pleas and are seeking bankruptcy protection
Retired nurse Jan Truelock paid more than $40,000 in January 2023 for a 450-square-foot accessory dwelling unit in her Roseville backyard. She was told construction would take 12 months, but the work never began
The company’s contractor’s license was revoked in 2024 as authorities continued investigating its collapse.
Katie Lucas paid Anchored Tiny Homes $211,000 in 2022 for a backyard unit in San Leandro that was intended to house her mother-in-law and grandmother.
She said the project was left as little more than a shell when work suddenly stopped. Contractors allegedly told her they had not been paid, even though she said she had settled her invoices on time.
When Lucas tried to reach the company, her messages went unanswered. After describing her experience online, she found numerous other customers facing similar problems.
A Facebook group created for affected homeowners reportedly attracted more than 1,000 members at its peak, with users sharing accounts of unfinished builds, stalled work and mounting losses.
Renee Kumamoto was another customer who said she paid $168,000 for an ADU for her father, who was undergoing treatment for cancer. She said Anchored Tiny Homes closed just two weeks after she paid the final invoice.
The company’s failure was especially notable because of its earlier expansion plans. In 2023, co-founder Colton Paulhus spoke about franchising the business across the country.
Anchored Tiny Homes announced its closure in July 2024. Austin Paulhus said at the time that the company had expanded too rapidly and was no longer able to meet demand.
The California Contractors State License Board received more than 200 complaints from 18 counties involving Anchored Tiny Homes
The brothers later filed for Chapter 7 bankruptcy. Contractors and franchisees also claimed they had been left with unpaid bills and substantial losses.
According to the criminal complaint, Colton withdrew $334,059 from company accounts between January 2023 and July 2024, while Austin withdrew $319,700. Prosecutors allege the money was used for expenses and activities unrelated to the company’s construction projects.
Blair Goss, Austin’s attorney, told NBC Bay Area that his client was prepared to cooperate with investigators. He declined to say whether Austin would testify against his brother.
The accusations have not been proven in court. The brothers are scheduled to return to court in January 2027.
For homeowners still facing unfinished ADUs and depleted savings, however, a criminal case may provide limited relief unless it also creates a realistic path to recovering the money they lost.
The Daily Mail has contacted attorneys Blair Goss and Hendrick Crowell, who represent Austin and Colton Paulhus, respectively, for comment.
