Founders of Anchored Tiny Homes face 35 felony counts over unfinished backyard ADUs

Each brother is charged with 33 counts of diversion of construction funds plus single counts of conspiracy and employee wage theft, the Contractors State License Board said on Oct. 20. Sacramento County prosecutors allege the pair collected more than $1 million on 13 projects without doing the work or supplying materials, and that more than $653,000 moved from company accounts to spending unrelated to construction, the California Post reported. These are charges, not convictions. Both men appeared in court by video on Oct. 14 and did not enter pleas, the Post reported.

The board said the complaints came from 18 counties and described abandoned ADU jobs, unpaid subcontractors, money collected before work was done and homeowner payments that never went into the homeowners' projects. It revoked the company's license in November 2024, kept investigating and then referred cases to prosecutors. A settlement conference first scheduled for October was continued to Jan. 12, 2027.

The defense calls the collapse a business failure. Blair Goss, the attorney for Austin Paulhus, told the Post that a company going under does not prove anyone broke the law and that prosecutors have not yet shown their evidence. In a December 2024 Facebook post, Colton Paulhus wrote that the company grew too fast without enough capital and that nothing illegal was done. The brothers have also turned to federal bankruptcy court for protection, according to the Post.

The board used the case to restate California's home improvement payment rules, which apply to ADU contracts. A down payment may not exceed $1,000 or 10% of the total price, whichever is less, and no later payment can run ahead of the work actually done or the materials already delivered.