California Anchored Tiny Homes Headed Toward Bankruptcy Amid Allegations of Fraudulent Business Practices
Anchored Tiny Homes, a Fair Oaks, California-based building company that once touted itself as a $100 million company, is now exploring bankruptcy options. The news of bankruptcy comes on the heels of hundreds of clients complaining they have been left holding the bag after the building company failed to deliver on the construction of the tiny homes it advertised.
Today over 60 families say they have been victimized by the company. In a newly formed Facebook group “Scammed by Anchored Tiny Homes,” these families say they paid tens and even hundreds of thousands of dollars for the construction of a tiny home that was never started or completed. While it’s not clear how many families and individuals have been victimized, it’s believed that there are hundreds of homes that have been abandoned mid-construction.
Anchored Tiny Homes became a popular name in the real-estate business across the Bay Area and the greater Northern California region for its advertisement and construction of accessible dwelling units or ADUs. These tiny homes are often constructed on the same lot as a homeowner's primary residence and were used by homeowners as separate living spaces. Many homeowners turned to ADUs as a way to create passive rental income, especially those who were looking for grounded ways to fund their retirement. ADUs have also been regarded as a viable option for creating more affordable dwellings in a community.
The family-run company was operated by CEO Colton Paulhus. Palhus told NBC News Bay Area in mid-August that the company was in a state that was “too late for reorganization” and that bankruptcy proceedings were being explored. Paulhus, a self-proclaimed entrepreneur, shares on his social media accounts that his goal in life is to become a billionaire. The ADU builder has reported six failed businesses behind him.
Meanwhile, clients of Anchored Tiny Homes say that they made regular, on-time, and consistent payments for the construction of their homes, only to have builders walk off the job site because of invoices they say were not paid by Anchored Tiny Homes.
The company’s former Chief Operating Officer Chris Pace has gone on record stating that the company was engaged in bad business practices that played a part in the company’s dire financial standing. Pace shared with local outlet NBC Bay Area that some of the funds were used to support Paulhus’ podcast – a podcast Pace says was not a legitimate business expense.
Many other clients who are left trying to figure out how they can recoup their funds allege that the actions of Anchored Tiny Homes go beyond just bad business practices and are rooted in criminal behavior.
Steve Sonza, a disabled vet who enlisted the services of Anchored Tiny Homes for his family, says that the company had access to their banking information to help streamline the payment process. However, over the span of 24 hours, the company made three unauthorized withdrawals from the family’s bank account.
The first two transactions were for $100,000 withdrawals. Later, the company withdrew another $21,000. These funds taken from the Sonza family’s bank account were in addition to a state grant the family received for $40,000 and a home equity loan for $50,000. “They took the money from our retirement savings. All of it, essentially,” Sonza shared with NBC Bay Area, "They drained it.”
The State Board of Contractors is investigating the building practices of Anchored Tiny Homes after mounting allegations of unfinished projects have been pouring in. According to the California Contractors State Licensing Board, “It is against the law for a contractor to collect payment for work not yet completed or for materials not yet delivered.” Such practices, however, appear to have been regular operating procedures for the company.
Former COO Pace says this is one of the red flags he saw during this time with the company. He shares that he quit his role there after he says the company illegally asked families to pay for services for future work and materials before there were plans for construction to start.
While there have been no criminal charges filed against the company, Anchored Tiny Homes is being investigated by several entities throughout the state of California.
