​​California Tiny-Home Developers Face Felony Charges After Abandoning Unfinished Projects

California homeowners who embraced tiny homes as an affordable housing solution say they were left with unfinished projects, mounting bills, and significant financial losses after paying thousands of dollars to a company founded by two brothers.

One customer was left with an empty backyard after paying more than $40,000 for an accessory dwelling unit (ADA). Another discovered contractors were allegedly not being paid and worried about the possibility of liens on her property. A third had hoped to build a home for her father, who was battling cancer, but was left in the lurch.

Tiny homes have become an increasingly popular housing option in recent years. But for many customers of California-based company Anchored Tiny Homes, that promise of an affordable housing solution became a costly nightmare.

Now, co-founders of the company and brothers, Austin and Colton Paulhus, face a slew of felony charges over allegations that they collected more than $1 million from customers on 13 projects without performing the work or supplying materials, according to a criminal complaint filed by the Sacramento County District Attorney’s Office.

Prosecutors also allege that more than $653,000 was taken from their business accounts for expenses and activities unrelated to company projects. 

Each brother faces 33 counts of diversion of construction funds, as well as one count of conspiracy to commit a crime and one count of employee wage theft.

On Oct. 14, the men appeared virtually in court. Neither entered a plea. Both brothers are also seeking bankruptcy protection in federal court.

For homeowner Jan Truelock, the case is a long-awaited step toward accountability. However, she told Realtor.com® that she worries customers will never recover their lost money. 

In January 2023, the retired nurse paid more than $40,000 to have a 450-square-foot ADU built in the backyard of her Roseville home. The company told her it would take 12 months, she said.

But construction never started, and a year later, her backyard was still empty.

Truelock became increasingly frustrated by lengthy delays and the company's lack of response to her calls and emails. When she tried to get out of her contract, they offered her only $5,000, she claimed. 

She also alleges that the company told her they spent $17,000 of her payment on materials she never saw. After hiring an attorney and suing the company for breach of contract, Truelock negotiated a $25,000 settlement.

Still out thousands of dollars, Truelock turned to another company, Imkat, to build her ADU. But she was horrified to learn that other customers and contractors of the Paulhus brothers had claimed even greater losses.

“I’m very glad they are finally held accountable,” Truelock says. “Accountability at this juncture would be prison time for Colton and Austin.”

Homeowners left with major financial losses

The charges come after an investigation by the California Contractors State License Board, which received more than 200 consumer complaints across 18 counties from customers who claimed they paid substantial sums for ADUs that were never completed, and in some cases, never started.

In November 2024, the board revoked Anchored Tiny Homes’ contractor license and its investigation continued after the company shut down, with cases referred to prosecutors.

But the damage was already done, and some customers were left scrambling to figure out how to recover their money or find another contractor to finish the work.

In 2022, Katie Lucas paid $211,000 to Anchored Tiny Homes for a backyard home in San Leandro, CA, which was meant for her mother-in-law and grandmother.

Instead of a finished space, Lucas was left with little more than a shell after work on the project came to a sudden halt. 

She told KCRA that she had paid the company promptly when invoices arrived, but contractors later told her they had not been paid. Her calls to the company went unanswered, she said.

When Lucas posted about her experience online, she discovered others were going through the same ordeal, and they formed a Facebook group that at one time exceeded 1,000 members.

Another customer, Renee Kumamoto, paid $168,000 for an ADU to house her father, who was battling cancer. But the company went out of business before construction began, just two weeks after she paid her last invoice, she said.

The allegations have left customers seeking answers about where their payments went and whether they will ever recover their money. 

A wait for answers

Truelock says she hopes the Paulhus brothers are held accountable for their alleged crimes, but admits she has little faith that customers will recoup their losses.

“I have doubts that anyone else will get any of their money back,” she tells Realtor.com.

She also questions whether customers would ever learn what happened to the money they paid the company. 

“I don’t believe we will find out exactly what happened to all our money, but I am sure a lot of it was spent on luxurious living and podcasts,” she says. 

The complaint does not specify how all the money was allegedly spent.

“I’ve moved past anger and have accepted that I’ve lost,” she says, adding that her new ADU was built by Imkat and that “it’s beautiful.”

At the Oct. 14 court appearance, Austin Paulhus’ attorney, Blair Goss, told NBC Bay Area that his client was willing to cooperate with investigators. Goss declined to comment on whether Austin would testify against his brother, Colton.

Realtor.com has reached out to Goss and to Hendrick Crowell, attorney for Colton Paulhus, for comment on the allegations.

Both brothers are expected to be back in court in January 2027.