Two California brothers who operated a backyard construction business are facing 35 felony counts each after prosecutors alleged they collected more than $1 million from customers while leaving projects unfinished or entirely unstarted.
Austin and Colton Paulhus, co-founders of Anchored Tiny Homes, were charged following an investigation by the Sacramento County District Attorney’s Office. According to prosecutors, the brothers collected upwards of $1 million across 13 distinct projects without performing the promised work or delivering materials. Investigators further allege that more than $653,000 was diverted from company accounts to expenses and activities unrelated to the construction projects.
The charges filed against each brother include 33 counts of diversion of construction funds, one count of conspiracy, and one count of employee wage theft. Both brothers appeared virtually in court on Oct. 14 without entering pleas and are currently seeking bankruptcy protection in federal court.
The sudden collapse of the company left numerous homeowners across California stranded, including elderly residents and families attempting to construct secondary backyard dwellings for aging relatives. Among them was Renee Kumamoto, who reportedly paid $168,000 for a backyard unit intended for her father, who was battling cancer. According to reports, the business shut down just two weeks after she made her final payment, before construction ever began.
Another customer, Mariah Dorn, publicly detailed her family’s experience in a July 2024 social media post, stating that the firm took $266,000 from her elderly parents, leaving behind an unfinished structure and unpaid subcontractors who filed liens against the property. “They stopped all communication and we are just left with a shell of a home and out of money,” Dorn wrote, warning other residents across the state.
The allegations triggered a sweeping inquiry by the California Contractors State License Board, which gathered more than 200 consumer complaints spanning 18 counties. Regulators officially revoked the company’s contractor license in November 2024, though investigations persisted after operations ceased.
Retired nurse Jan Truelock experienced similar setbacks after paying more than $40,000 in January 2023 for a 450-square-foot backyard home at her Roseville property. Promised within a year, the backyard remained empty 12 months later, prompting Truelock to file a breach of contract lawsuit that resulted in a $25,000 settlement. “I’m very glad they are finally held accountable,” Truelock said, adding that she believes prison time is an appropriate outcome.
Despite the mounting legal pressure, the brothers maintain that the company’s failure stemmed from business mismanagement rather than criminal activity. In a lengthy December 2024 statement, Colton Paulhus acknowledged the severe collapse of the firm while denying any unlawful conduct. “My last business failed. In a major way,” he wrote. “There’s nothing for me to hide. Nothing illegal was done.” He blamed the downfall on rapid expansion, claiming the company grew too quickly and lacked sufficient capitalization.
Legal representation for Austin Paulhus echoed those defenses. Sacramento-based criminal defense attorney Blair Goss argued that financial failure does not equate to criminality. “A business failure is not proof of a crime. When a company fails and customers lose money, that is painful, but it does not necessarily mean anyone broke the law,” Goss stated. “The prosecution has made its accusations, but it has not yet shown us its evidence. Austin will be judged on his own conduct, not on a company’s collapse.”
The case is scheduled to return to court on January 12.
