Some of Rent-A-Husband investors' stories

…he preys on women and less-savvy financial types, befriends them, then pursues any money or home equity of which he becomes aware. Once he has the money, they say, he would either stop initiating contact or occasionally would send e-mails — including dozens reviewed by USA TODAY — proclaiming the huge percentage increases their investments had earned.
October 21, 2009

Some of Rent-A-Husband investors' stories
Jayne O'Donnell, USA Today

Are Rent-A-Husband's disgruntled investors victims or savvy financial types who simply saw their investments turn sour?

Kaile (pronounced "kale") Warren says his financial backers were all smart investors.

Some of Warren's investors and almost-investors, however, say he preys on women and less-savvy financial types, befriends them, then pursues any money or home equity of which he becomes aware. Once he has the money, they say, he would either stop initiating contact or occasionally would send e-mails — including dozens reviewed by USA TODAY — proclaiming the huge percentage increases their investments had earned.

And some of the deals were so convoluted that attorneys who have reviewed the documents for investors and at USA TODAY's request said even they didn't understand some of the language.

Warren says he has raised about $2 million from fewer than 100 individual investors on top of the $2.4 million invested by a now-defunct venture capital firm. He says he has paid back $650,000 to individual investors.

• Christian and Colleen Olsen, who met Warren while he was serving on the Windham, Maine, Town Council, filed a lawsuit against him and his real estate brokers on July 30. In the lawsuit, the Olsens say Warren and his brokers used the Olsens' property as collateral in March 2008 — the same month Ace Hardware cut off dealings with Warren — to secure a $45,000 loan; they also lent Warren $5,000 as a personal three-month loan and $10,000 to invest in a new store he described as a "do it for me" concept.

They say they haven't received anything to date, and on Sept. 21, they received a notice that foreclosure proceedings had been started because the loan plus interest and fees totaling $51,065 hadn't been paid by the due date of Sept. 18. The couple say that they believed they were only putting two lots adjacent to their house up as collateral — not their house — and that they repeatedly stated that distinction to Warren and the mortgage company, a distinction they say all agreed to.

In a motion to dismiss the case in August, Warren's lawyers said the Olsens were "unhappy with a deal they made" and denied Warren was guilty of fraudulent conduct.

"He told us we would make 10% interest per year for two years and would have nothing to worry about," the Olsens said in a statement. "We were repeatedly assured our home would not be in jeopardy."

•Joanne Grace says she was about $25,000 in debt from an attempt to launch an inspirational calendar company when she asked Warren, whom she had seen on TV and met once before, for business advice. Shortly after, she refinanced her home and had about $175,000 in equity that she could borrow against.

Instead of using $150,000 for a family business venture, she says, she was convinced by Warren that she should invest the money in Rent-A-Husband, including purchasing a franchise in New Hampshire and the rights to sell franchises in Florida.

Warren says Grace didn't do enough to build her franchise. Grace says Warren did not make the New Hampshire franchise "turn-key," which was defined in paperwork attached to the promissory note as including payment for a marketing campaign until the location had two consecutive weeks of sales above $2,000, and a one-ton truck and tools. The truck and tools were in such bad condition, she says, that she asked for her money back but never got it.

A promissory note dated July 26, 2006, stated Grace would get her $150,000 plus 10% interest six months later. An addendum spelled out that $50,000 would pay for the New Hampshire franchise, $60,000 for franchise rights to Florida and that she'd get back $40,000 along with a "$10,000 increase" in six months. Warren never turned the New Hampshire franchise over to her.

Warren also pledged to make her mortgage payments, which more than doubled, "until the first franchise in Florida is sold." No franchises have been sold in that state. Warren has missed enough mortgage payments or made them so late that CitiMortgage is now forcing her to sell her home in a short sale, according to Downing Real Estate, which is representing Grace in the sale. Grace says Citi has told her they could still foreclose on her. In an interview, Warren said he thought he was current on Grace's mortgage.

Warren says Grace was a smart businesswoman who could have helped turn around Rent-A-Husband's fortunes if she had worked harder and not suffered an injury that left her unable to work for several months. Grace says her injury didn't occur until 16 months after she paid for the franchise and that she did all she could but needed Warren to provide the marketing support and equipment he promised.

•Lawrence Gould, the now-ailing founder of Camp Sunshine, a camp for critically ill children and their families, invested about $400,000. His ex-wife, Anna Gould, says her 79-year-old ex-husband "is a little more financially secure" than others who invested, but he, too, "was trying to get his investment back and didn't have any luck." She says she and her ex-husband both often used their own money to subsidize the camp, making a bad investment particularly painful. Warren says he maintains good relations with Lawrence Gould.

•Psychotherapist Gaille Brennan and her husband, Shamos, who did maintenance work for Portland, Maine, schools, signed a promissory note in August 2002 for $23,500, which included $3,500 from Gaille's sister. By the end of the year, they say, Warren sent the Brennans an e-mail that predicted 77% growth for another year, noted his contract as a contributor to CBS had been extended, and said that he planned to raise $100,000 from friends and family. (His CBS contract ended in December 2007.) By mid-2004, they say, Warren persuaded them to turn $150,000 of the $275,000 sale price of their home into an investment in Rent-A-Husband. Timed payments that would begin six months later never started, they say.

Last fall, Shamos Brennan says the couple realized they were about $1,500 short in meeting their expenses, including Gaille's medical bills and taxes, so they called Warren and told him they "were broke."

"When I told him, 'Time's up,' he disappeared and went into cyberspace, and I never heard from him again," says Shamos. "He sucked me in well. (Rent-A-Husband) was going to be worth $100 million and was hitting grand slams."

Warren says he is hoping to pay the Brennans back, adding, "Dr. Brennan is clearly a very accomplished and knowledgeable person (and) investor."

•Lane Hiltunen, a disabled Vietnam veteran, invested $10,000 in Rent-A-Husband in January 2008 shortly after he met Warren, who told him his company "was going to explode" because of the Ace partnership. The promissory note he signed was the second investment Hiltunen had ever made. Warren told him he would get a 10% return the first year and another 10% the second year, though Hiltunen says he never asked for the money, preferring to wait until January 2010, the deadline for repayment.

Warren says Hiltunen was a "qualified investor" and notes his investment deal "is current."

Hiltunen says he's concerned about his own investment but worries more about others, such as those who are losing their homes.

"I don't consider myself important in this," says Hiltunen. "When I see people being taken advantage of, it just drives me crazy."

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