California lawmaker moves to stop contractor ‘money grab'

For months now, NBC Bay Area has responded to viewers’ heartbreaking complaints. They say they lost tens of thousands of dollars each when an ADU builder imploded and went bust. 

Now, a local lawmaker is proposing statewide change to prevent what he called a money grab. “It was your investigative reporting that flagged this for us,” said California Assemblyman Marc Berman, who represents the Peninsula and part of San Jose. 

Backstory of the bust

The controversy hits home for Lara Zanzucchi in Martinez.

“It’s devastating, because you don’t know if you can finish your project,” she said. The backyard ADU for her mom is finally taking shape -- albeit two years later than expected and about $40,000 over budget. She points broadly as she stands inside the unfinished ADU. “Everything here is from the contractor that took me on when Anchored took my money and ran.”

‘Anchored’ is Anchored Tiny Homes, the business that many Bay Area homeowners tell us took big money up front, but then failed to deliver. Girija in Cupertino says Anchored took almost $32,000; Maria in Walnut Creek says she’s out $40,000; in Oakland, Alan says he’s out $80,000. The largest case we’ve seen is Steve Sonza in Rohnert Park. His family has nothing to show in their backyard for the $315,700 that Anchored Tiny Homes got. “It’s clear the law was broken,” Sonza said.  

NBC Bay Area started investigating. Anchored Tiny Homes quickly closed its office and went belly up. The state contractor board recently revoked the company's license. “This is accountability,” said Katherine White with the California Contractors State License Board. “This is the biggest step that CSLB can take.” 

$100M business?

Anchored Tiny Homes’ former CEO boasted online that the builder was booming. “I can tell you right now, a $100 million business,” said Colton Paulhus on his now defunct podcast.  

But now, Paulhus and his co-founder brother, Austin, have filed for bankruptcy. They’ve told the court their customers’ money is gone. Colton Paulhus told NBC Bay Area that Anchored was just a “failed, mismanaged growing business.” Their attorneys have declined to comment. 

Customers are frustrated. “It’s a sense of absolute violation,” Zanzucchi said. And recently, another ADU builder near L.A. also imploded.   

Berman saw the stories and is taking action. “I learned about it from your stories, and I really appreciate you doing that investigative reporting,” he said. “Sometimes, that’s how we find out about things.”

Calls for change, answered

Berman says California law needs new teeth. So, he’s proposing a stiff new penalty for contractors who take too much money up front or collect progress payments without actually making progress. “Up to $10,000 per case,” he explained. “We want it to be a really severe penalty if people violate this. That’s righteous. We should have that.” 

Berman just filed a bill to add that new penalty to state law. He believes it should scare off bad guys and protect families. “We don’t want to create any incentive for fly-by-night bad actors to say, ‘Oh, here’s an opportunity for a massive money grab ... we can just disappear or go bankrupt.’”   

The proposed reform to California law is too late for Anchored Tiny Homes customers, like Zanzucchi. “I recognize I won’t get my $40,000. It’s probably to the wind.” She’s encouraging Berman’s colleagues in the Legislature to vote yes and for Gov. Gavin Newsom to sign the contractor bill into law as soon as possible. 

“Without the law changing, they have free reign,” she said. 

Zanzucchi says she hopes the Legislature also dramatically increases the bond contractors are required to carry – to protect consumers. Many Anchored customers told NBC Bay Area they lost thousands but will only get a few dollars from the bond … because it’s divided up over so many customers.

A tip to our team launched our investigation. If you have a tip or a consumer complaint, snap the QR code in the video above to fill out our consumer complaint form online.