Rent-A-Husband founder indicted on felony charges

Kaile Warren, founder of the Rent-A-Husband home repair chain and a national TV personality, faces three felony charges, including securities fraud and theft by deception for misleading more than 50 people who invested in his virtually insolvent company. Warren was indicted Friday by a grand jury in Maine and faces up to 20 years in prison if convicted of the charges.

http://www.usatoday.com
December 11, 2009

Rent-A-Husband founder indicted on felony charges
Jayne O'Donnell, USA Today

RentaAHusbandKaileWarren2.jpg

Kaile Warren Jr., founder of the Rent-A-Husband handyman chain, poses, in 2002, in an addition his company was building. By Fred Field, AP

Kaile Warren, founder of the Rent-A-Husband home repair chain and a national TV personality, faces three felony charges, including securities fraud and theft by deception for misleading more than 50 people who invested in his virtually insolvent company.

Warren was indicted Friday by a grand jury in Maine and faces up to 20 years in prison if convicted of the charges.

"He was quite the salesman," says Maine Attorney General Janet Mills. "He persuaded investors that his business had substantial assets, when, in fact, he had substantial debt."

In October, USA TODAY detailed the methods Warren used to raise money from investors.

Warren has previously denied misleading investors.

The indictment charges that Warren:

•Misled investors up to January that his company was worth between $7 million and $18 million and had an expansion deal pending with Ace Hardware.

Warren told USA TODAY that deal fell apart in March 2008. The indictment says the company lost more than $400,000 every year starting in 2003.

•Failed to disclose to investors that his debts to investors had grown from $240,000 in late 2003 to $1.6 million in August and that he "could not meet its obligations without continuously selling promissory notes."

•Used money raised from promissory notes with investors for "restaurant meals" and other personal expenses and planned to continue to do so with a "substantial portion" of new notes.

Joanne Grace used the money from refinancing her home to invest $150,000 in Rent-A-Husband franchises she never received. Her home is in a short sale and could be foreclosed upon.

"It almost made me ill that this guy could just feel so entitled to use other people's hard-earned money to support his lifestyle knowing we were all desperately needing it back and going through our own set of financial woes," said Grace.

Along with prison time, Mills says, her office will seek restitution for the victims.

One complicating factor in restitution could be that the home Warren lives in and another he rents out with his live-in girlfriend are both in her name.

Mills declined to comment on that aspect, but Joseph Borg, Alabama's top securities official, says homes in such cases could be seized if "the money from victims is clearly traceable as the (money) paid to buy the houses." One of the homes was purchased in part with a $150,000 investment in Rent-A-Husband by Shamos and Gaille Brennan, who have unsuccessfully sought repayment.

That may be all that could conceivably be considered assets of the author, former CBS Early Show home repair contributor and frequent guest on other national TV programs, including The Oprah Winfrey Show.

"Just because a person's pockets are empty at the time of sentencing doesn't mean they can't be ordered to find the money and pay it back," says Mills.

http://www.usatoday.com/money/companies/management/2009-12-11-rent-a-husband-founder_N.htm


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