The two brothers behind Anchored Tiny Homes, once a fast-growing Fair Oaks-based builder of backyard units across Northern California, are now facing a 35-count felony complaint accusing them of conspiracy and repeated violations of state law. Austin and Colton Paulhus co-founded the company, and prosecutors allege they billed customers approximately $1,046,433 while performing no work and supplying no materials.
Prosecutors Allege Money Diverted From Customer Accounts
According to the NBC Bay Area report that broke the news, the Sacramento County District Attorney's Office filed the complaint alleging the brothers conspired and repeatedly violated state law. The complaint further alleges that Austin and Colton Paulhus diverted more than $653,000 from company accounts for expenses and activity unrelated to the projects customers had paid for. Prosecutors say the brothers wrongfully diverted money paid by more than 30 customers who had hired the company to build accessory dwelling units, and the Paulhus brothers' case is now docketed in Sacramento Superior Court for next week.
The allegations track years of customer complaints describing Anchored Tiny Homes abandoning projects after collecting tens of thousands of dollars up front, forcing some prepaid families to find new contractors and pay for portions of the work a second time. Katie Lucas, a former customer of the company, said she cried after learning that action was finally being taken, and said she believes someone will be held accountable for what happened. The Sacramento District Attorney's Office has said it does not discuss pending cases.
From Backyard Boom to Bankruptcy
Anchored Tiny Homes was started in 2019 by Colton Paulhus, his brother Austin Paulhus, and their father Scott Paulhus, according to The Sacramento Bee. By 2023, the company had built 200 homes in Northern California and held contracts for another 300, with roughly 500 units built or in progress and franchises launching nationwide, per the same outlet's reporting. More than 100 franchises had reportedly been sold across 37 states, with each franchisee spending nearly $150,000 on average. Colton Paulhus had boasted that his Sacramento-area company was putting ADUs in backyards across Northern California and generating substantial revenue in 2023, at one point describing it as a $100 million business.
The planned homes ranged from 600 to 800 square feet and cost between $100,000 and $350,000, averaging $185,000, the Bee reported. That growth did not last. Anchored Tiny Homes filed for Chapter 7 bankruptcy protection in Sacramento federal court on September 30, 2024, listing more than $12.8 million in debts owed to more than 870 creditors.
Brothers Sought Bankruptcy Protection Individually Too
Austin Paulhus and Colton Paulhus also sought bankruptcy protection individually in federal court. Colton Paulhus's petition listed $3.6 million in debt liabilities against just $1,400 in cash, according to NBC Bay Area's investigative reporting. Austin Paulhus's petition referenced $6.5 million in taxpayer-backed Small Business Administration loans.
Colton Paulhus has said the company grew too fast and took on too much debt, leaving it unable to pay contractors on time, as he told ABC7 News. In the more recent complaint coverage, he described Anchored Tiny Homes simply as a failed business.
License Revoked, Complaints Piled Up
California had already moved against the company before the criminal complaint surfaced. The state revoked Anchored Tiny Homes' contractor license. Separately, complaints against the company alleged that it took too much money up front and abandoned projects. The Contractors State License Board said the company violated home improvement contract requirements and received or requested more money than the work it had completed, and board records show the agency had received nine disclosable complaints against the business.
California law limits the maximum a contractor can take from a customer up front to $1,000, a threshold the state's home-improvement statute reinforces by also capping deposits at 10% of the contract amount, whichever is lower.
Customer Losses Still Being Tallied
Alan Miller, one of the customers named in reporting on the case, said he lost $80,000 on an abandoned, half-built ADU in 2024. Estimates of the total damage vary by account: the Bee reported a self-reported spreadsheet showing more than $5.7 million in alleged losses across 65 customers, contractors and franchise owners, while ABC7 News described a Facebook group counting more than 60 customers, subcontractors and franchisees with combined alleged losses of $5.5 million. Those figures have not been reconciled into a single confirmed total.
