NorCal construction company promised ADUs. Clients say it ‘scammed’ them out of millions

As a retired nurse and single woman living alone, Jan Truelock said she did not know how to navigate the process of adding a 450-square-foot accessory dwelling unit to the backyard of her Roseville home.

She found Fair Oaks-based company Anchored Tiny Homes in January 2023 — which advertised that it handles everything, including permits. She quickly signed a contract.

Truelock, 65, was told her project would be completed in 12 months.

Instead, she said she found herself in early 2024 out more than $40,000 with an empty backyard. Then a gas line was found running under the site that she felt ATH should have checked for earlier, further drawing out the permit acquisition process.

Truelock is one of about 800 members who have joined the Facebook group “Scammed By Anchored Tiny Homes” since late last month. In the group, former customers, contractors, employees and franchise owners have gathered to share their stories, launch complaints and warn others about a company they once trusted.

In a shared spreadsheet for users to self-report their losses, the total alleged amount has grown to over $5.7 million for 65 customers, contractors and franchise owners connected to Anchored Tiny Homes.

The Sacramento Bee spoke to 24 people affected by Anchored Tiny Homes — former customers, contractors and employees — and reviewed dozens of stories posted in the Facebook group.

The company’s owners did not respond to multiple requests for an interview.

Construction never started on Truelock’s project. She tried to get out of her contract after a lengthy permit process and months of Anchored Tiny Homes being slow to respond to her or not responding at all. She also felt that it was negligent that no one had checked for a gas line earlier.

Truelock said she paid more than $40,000 for the project but was only offered around $5,000 back when she ended the contract. She alleges that the company told her they spent $17,000 of her payment on materials she never saw.

Ultimately she hired a lawyer to sue ATH for breach of contract that ended in an undisclosed settlement, but Truelock is still without the ADU she wanted. She considers herself one of the lucky ones. As she restarts her ADU build process with a new company, she continues to see stories of former customers and contractors in worse situations than hers.

As of Friday, two lawsuits had been filed against the company in Sacramento County; nine complaints have been launched with the Contractors State License Board; and former workers, contractors and company executives have joined the chorus of those calling Anchored Tiny Homes “scammers.”

“There are people in that group who have paid hundreds of thousands of dollars for absolutely nothing,” Truelock said. “And they probably will never see that money.”

Delays for custom tiny homes

Anchored Tiny Homes was started in 2019 by Colton Paulhus, his brother Austin Paulhus and their father Scott Paulhus.

In early 2021, Andrea Montano wanted to purchase a custom tiny home on wheels from the trio, which was their focus at the time. Now she considers herself one of the first to have a bad experience with the company.

A few months after signing, Montano tried to cancel her project after it was passed from designer to designer. She alleged that Colton Paulhus told her she couldn’t cancel the contract because the trailer had been purchased.

The trailer was purchased with a $100,000 loan under Montano’s husband’s name, she said. Neither she nor her husband had authorized the loan and it was not supposed to be taken out until design plans and costs were finalized.

Colton Paulhus told Montano once a new project was completed he would give the loaned money back to the bank. Two months passed and the loan was still outstanding. Again, she said he assured her it would be paid.

In the fall of 2023, two years after Montano first found out about the unauthorized loan, her husband got a call that payments were overdue. The couple had no idea it was still outstanding. When Montano tried to contact Colton Paulhus, she was ignored.

It took threatening legal action over a Facebook Messenger conversation for him to pay the outstanding balance of $80,000.

Montano cried when speaking about her ordeal and felt distraught after seeing similar stories in the Facebook group.

“It has really escalated beyond the scope and magnitude of what anybody had thought that they were capable of,” Montano said. “I regret not sharing sooner. I could’ve saved a lot of people from this.”

Other customers The Sacramento Bee spoke to reported losses, extreme project delays and being offered discounts that ATH later retracted.

As of Thursday, the Contractors State License Board had received nine disclosable complaints against Anchored Tiny Homes. According to a statement from a board spokesperson, the complaints included “alleged violations of abandonment, departing from trade standards, departing from plans or specifications, failing to timely pay a subcontractor, receiving/requesting more money than work completed, lack of reasonable diligence, and no written change orders.”

The board has moved to investigate the numerous complaints involving the company after staff determined a probable violation occurred. If the allegations are proven, the board could suspend or revoke the contractor’s license or pursue criminal prosecution, a CSLB spokesperson said.

Right time, right place for ADUs

In recent years, the Paulhus trio switched to focusing more on accessory dwelling units, commonly referred to as ADUs.

These kinds of units have boomed in popularity in Sacramento and across California as the state’s affordable housing crisis has worsened. New laws have helped streamline ADU construction and allowed some single-family homeowners to split their lots, enabling more units to be built on a parcel of land.

The Paulhuses quickly capitalized on the growing excitement toward “granny flats.” They promised finished homes that were around 600 to 800 square feet and typically featured granite kitchen islands, hardwood floors and built-in microwaves.

The mission on their website was straightforward: “Address the national housing crisis by constructing backyard homes that seamlessly blend into your property!”

By 2023, hundreds of customers had bought into the pitch. About 500 homes were built or in the works and several franchises were starting up across the country.

In November 2023, Chris Pace was hired as the vice president of operations for Anchored Tiny Homes. After four months, he was promoted to Chief Officer of Operations. Three months later, he handed in his resignation letter.

During his seven-month tenure, he saw the company struggle with severe financial issues. He said he never handled any financial information directly, but the red flags were obvious.

Shortly after starting the job, Pace said two company leaders — the vice president of sales and the director of construction, were fired. He took on some of their work and began questioning ATH’s business model. Pace said the company was selling tiny homes for so little money that not enough funds were left over for construction, which led to contractors not getting paid on time.

“Subcontractors weren’t being paid tight,” he said. “It’s kind of common in that business that you get paid within one to two weeks. We were paying people right around 30 days.”

As COO at Anchored Tiny Homes, Pace managed franchise operations. By March, the company had sold more than a hundred franchises across 37 different states. On average, each franchisee spent nearly $150,000 to buy into the ATH brand, Pace said.

Many were preparing to open as quickly as possible, but Pace needed more money and staff to help franchise owners open operations. But when he requested additional funds, Colton Paulhus said the company had no money to authorize more franchise expenses. Pace was stunned that the funds from franchise sales had disappeared.

“That was the second real red flag,” Pace said. “I was like, ‘This doesn’t feel right.’”

In May, Anchored Tiny Homes started falling behind on payments. Pace thought the company might be underwater. His fears were confirmed when ATH’s new CFO alerted Pace that the company had taken out more than a dozen loans and was in major debt.

Soon after, Pace confronted the Paulhus brothers about the company’s sinking funds. He was promised investors would come through in two weeks.

Two weeks came and went.

Pace decided to resign.

Workers wait for weeks of wages

By the end of July, Anchored Tiny Homes missed payroll. Austin Paulhus notified all employees by email on July 31.

“As of today, we will not be able to make payroll for the period 7/16/2024 - 7/31/2024 with the paid date of 8/6/2024. All payroll amounts will be paid in full plus all penalties accumulated according to the state of California. We are continuing to work with investors to partner with and will keep everyone updated,” Paulhus wrote in an email shared with The Bee.

Justin Tejomaya, a former construction project manager for Anchored Tiny Homes, is still missing $12,000 in unpaid wages, paid time off and sick time.

He worked at the company for nearly a year and was responsible for managing the construction of about 20 ADUs. He said poor management caused missed wages for subcontractors, delayed projects and frustrated clients.

“It honestly became half of my job, basically managing calls from subcontractors, prodding and pleading and pulling and cajoling to get s--- paid so things could get done,” he said.

But Tejomaya couldn’t bring himself to leave the company.

“I have a 2-year-old. So as bad as it got, as long as they wanted to give me my paycheck,” he would stay, he said.

Tejomaya said he begged for subcontractors to be paid for work they had already completed. He knew of at least a dozen who are still missing money.

Josh Jacobs is among these unpaid workers. He completed four projects for Anchored Tiny Homes in the last few months and is still out nearly $30,000.

He owns Jacobs’ Plumbing & Drain Cleaning, a small four-person business servicing the greater Sacramento area. He spent thousands of dollars on labor and materials, but said he was only paid $1,000 following the very first project his team completed for the company.

At the beginning, Jacobs and his team were happy to take any work they could get, until he realized no money was coming in. He tried to get a hold of Colton Paulhus and only got excuses in return.

“They just kept feeding me lies and lies and lies,” Jacobs said.

Carlos Lubiano also struggled to get paid for projects. Anchored Tiny Homes allegedly still owes his construction company, MC Construction, $90,000.

Lubiano said he would frequently get paid late, and was usually waiting for tens of thousands at any one time. But he continued to take on new ATH assignments because he needed the work and did not want to risk getting ghosted by the company.

In retrospect, Lubiano regretted continuing to pick up projects without consistent payment for so long.

“Really early on we shouldn’t have ignored those red flags of not getting paid on time,” Lubiano said.

Lawsuits filed by customers, former employee

Some have resorted to filing lawsuits against Anchored Tiny Homes as a last-ditch attempt to get lost wages and savings back. Two have been filed in Sacramento Superior Court, one of them earlier this month.

On April 22, Micah Whitehead, a former sales representative for ATH, filed a civil lawsuit in Sacramento County against the company alleging it failed to pay him part of his salary and deliberately withheld his sales commissions.

Whitehead worked at ATH from November 2021 to March 2023. During that time, he claimed he was not given adequate meal periods or rest breaks and that he was wrongfully terminated and not given final wages upon separation from the company, among other allegations. Following his departure, he alleged that ATH owed him more than $220,000 in unpaid wages and sales commissions, according to court documents.

Whitehead did not immediately respond to interview requests. The next hearing in the civil case is scheduled for January.

Kate Brolan and Sydney Brown filed another lawsuit against Anchored Tiny Homes on Aug. 6 alleging that they lost a significant portion of their life savings, totaling nearly $344,000, due to negligence and breach of contract by ATH on their two ADU projects.

They alleged financial elder abuse in the case as well and said the company knowingly took advantage of them because of their ages — Brolan is 68 and Brown 77. Brolan declined a request to be interviewed.

Brown and Brolan’s case also alleged that ATH made false promises regarding the project completion date with no intention of honoring those agreements.

Anchored Tiny Homes exploring bankruptcy

On Monday, a number of customers shared an email on Facebook that they received from Cole, Austin and Scott Paulhus.

“As you know we have been working diligently on getting capital in the door to continue operations,” the email said. “Unfortunately none of those options have materialized and Anchored Tiny Homes and Anchored Tiny Homes Franchising have suspended operations and are currently evaluating our bankruptcy options.”

This is the first communication many have received in the weeks after the company stopped paying their employees.

“We are truly sorry for how this has played out, we have painfully tried all our efforts to restore the company that we all had high hopes for,” the email concluded.

In the last few weeks, many have been unable to reach anyone at the company. Recently, franchisees’ emails and phone numbers were disconnected as well.

Customers have been filing complaints with the Contractors State License Board and Better Business Bureau, also sending contract termination letters to ATH’s empty Fair Oaks office.

A spokesperson for the Sacramento District Attorney’s Office confirmed that they have received a letter about the company as well.

In the meantime, Anchored Tiny Homes customers, contractors, franchisee owners and employees are stuck in limbo.

Many clients are left with half-constructed units in their backyard. Contractors said they are missing thousands of dollars in labor and materials. Employees said they lost their jobs and two weeks pay. Franchisee owners are left with a brand that may soon be bankrupt.

“At the core of all of this, you got three really malevolent bad people, and then around all of that, you have wonderful subcontractors, awesome clients, great employees,” Pace said, “and everybody just got screwed.