WINDHAM – Three years ago this week, Kaile Warren was indicted by a Cumberland County grand jury on three charges of defrauding investors in his national handyman company, Rent-A-Husband.
By 2009, the former Windham town councilor was living pretty well. Homeless when he got the idea – from God, he says – to start the business, he by then lived in a nice home overlooking Mill Pond in North Windham. He owned what seemed to be a rapidly growing business with a catchy name. Warren, with his eye-catching hairdo and polished TV-star persona, had gained national notoriety for Rent-A-Husband, and was even featured on “Oprah” and the “The Big Idea with Donny Deutsch” on CNBC. By the time the indictments were handed up, he had also spent several years hosting a home repair segment on the CBS Early Show, replacing Bob Vila as the network’s home improvement expert.
But in a matter of months, starting when investors first cried foul in summer 2009, everything crashed to the ground. Local, regional and national news outlets carried the story of Warren’s troubles with investors. The indictments of Dec. 11, 2009, which saw Warren facing down 15 years in prison, were the death knell of the already struggling business, as well as the beginning of some dark days for the well-known Windham resident.
Warren is now trying to erase the last three years. He is free of his own legal entanglements, and a lawsuit seeking damages from his former lawyers and Ace Hardware regarding investment advice and agreements is set to go to trial in June. He may have gotten into trouble partly because of the promises he made to investors, but he believes those promises can still come true. Warren, who built Rent-A-Husband from nothing only to see it return there, says he is optimistic he can build it all again.
Falling fast
The trouble for Warren started when irate Rent-A-Husband promissory note holders complained in summer 2009 to state officials that Warren was not paying them back. Warren’s business came under scrutiny from regulators, reporters caught wind of the nonpayment inquiry into Rent-A-Husband and Warren’s world fell apart. Then, the indictments came.
Warren spent much of 2010 doing his best to keep the company afloat. He was losing income rapidly, and he was forced out of his company headquarters on Riverside Drive in Portland. He began working out of his home office instead, but little work presented itself following the bad publicity. Needing to pay for a high-quality criminal defense attorney, Warren had to put a $150,000 lien on another home he owned to pay his new lawyer, Dan Lilley.
Then, in early 2011, Warren’s fortunes changed for the better. When a new administration took charge in Augusta, Attorney General Janet Mills, who brought the original charges against Warren, was replaced with Bill Schneider. Almost immediately, Schneider dropped the charges. Schneider said the state would have a hard time proving the charges against Warren since Warren was acting on the advice and counsel of lawyers who should have steered him clear of any problems.
While he had avoided jail, Warren was only let off on the condition that if he were to regain his financial footing, he would return $2 million to Rent-A-Husband investors. So, in spring 2011, with the criminal charges against his client dropped, Lilley filed a civil suit against the two law firms that did about $700,000 of work for Warren drafting investment contracts and agreements that ended up violating Maine securities law. Lilley sued Preti Flaherty and Marcus Clegg & Mistretta, both based in Portland, as well as the home improvement store giant, Ace Hardware, which worked with Warren on a plan to open several Rent-A-Husband franchises at Ace-owned stores.
Almost two years later, the lawsuit is still in the court system, with more than 300,000 documents in the case file. While a jury trial is scheduled for June 2013, preparation is active and ongoing. This week, Lilley flew to Ace Hardware’s corporate headquarters in Chicago for three days to collect depositions from company executives who dealt directly with Warren during a period of several years in the mid-2000s.
While Warren cannot afford health insurance and has to drive to jobs in a 1999 pickup, he could be a millionaire if the civil suit is successful. Lilley is seeking $15 million in damages to Warren’s Rent-A-Husband brand, as well as personal damages totaling another $15 million.
“Randy Dunham, an accountant and financial adviser from New Hampshire, he’s evaluated and looked over the business, and he’s the one who came up with the $15 million figure,” said Lilley. “And that doesn’t include the personal claim, based on loss of reputation and health. The jury will decide that though. But we think the personal damages are certainly equal to the professional. So it’s a big case – it’s the biggest case I’ve ever had.”
Lilley says his client aims to prevail.
“He had the world by the rear end at one point. I don’t think he’ll ever get his reputation quite all the way back, but he’s certainly going to try. He’s the kind of guy, you knock him down, he gets back up, brushes himself off and gets back at it. As Kaile likes to say, he’s not a victim, he’s a survivor,” Lilley said.
On the case
The case has been a complicated one based on securities law. Lilley says it alleges that the law firms were the ones that gave Warren bad legal advice when it came to drafting contracts for Rent-A-Husband investors. Lilley also said Ace is to blame because they “strung him along,” promising in emails to open multiple Rent-A-Husband kiosks within Ace Hardware stores. Warren took that information and told investors of the potential windfall Rent-A-Husband could experience convincing many – including Windham residents – to jump on board.
Lilley says Ace was very active with Rent-A-Husband and at one point tried to buy into the company, and even tried to solicit investors, as well. At no time was an official contract signed, however. But, according to Lilley, contract law is on Warren’s side.
“They had a handshake partnership which never resulted in a written contract, but certainly under Maine partnership law, it was a contract. That’s our view anyway,” Lilley said.
When the indictments were issued in December 2009 and Warren was formally charged with defrauding investors, Ace Hardware and the law firms were careful to keep their distance, Lilley said.
“They were like, ‘Kaile who? I don’t know what you’re talking about.’ And of course that didn’t do anything but exacerbate the situation for Kaile because Ace Hardware pretended they didn’t know him. And of course they had tried to buy his company many times,” he said. “But all these documents we have unearthed are proving that Kaile was a victim of betrayal by Ace Hardware and his two law firms unfortunately. That’s the one word I think this case boils down to: betrayal.”
Representatives for Preti Flaherty, Marcus Clegg & Mistretta and Ace Hardware would not comment, saying it is an ongoing legal matter. Janet Mills, who works in Preti Flaherty’s Augusta office and is resuming her role as Maine’s attorney general, did not return a phone call seeking comment.
Mills, Warren says, plays an especially key role in his three years of misery. She decided to charge Warren personally with fraud, rather than the law firm that drafted the contracts and should have made sure he followed the law.
“They definitely did not charge the culprits in this case because the attorney general’s office knew that Preti Flaherty and Marcus Clegg & Mistretta were the culprits, and they turned a blind eye to that and came after me,” Warren said.
Lilley adds, “Mills charged my client but she didn’t charge the law firm which gave him the legal advice. Then she went to work for the same law firm. So that’s another story with a funny smell.”
Warren also wonders why Preti Flaherty issued a press statement indicating they were pleased for Warren when Schneider dropped the charges in early 2011.
“In order for Preti Flaherty to be pleased the attorney general is dropping their criminal case, they had to believe I was not guilty,” Warren said. “OK, so that begs the question, if Preti Flaherty believes I was not guilty, why did they never ever step forward and tell the prosecutors, ‘Listen you’re making a mistake. We do not believe this guy is guilty.’
“And the answer to that is they never came forward to tell how they really felt because for them to prove I was not guilty they would have had to implicate themselves. And they did not have the moral conviction or professionalism to do that.”
Starting over
Warren says the company he started in 1996 is still operating. While there are 10 Rent-A-Husband franchises still operating from Ace Hardware locations in the western United States, Warren receives no royalties since the corporate level of Rent-A-Husband, of which he is the sole officer, is not able to provide support services to franchisees.
So Warren is back to doing what he did when he started the company, performing home-repair jobs on his own. And the former television handyman is looking forward to getting back on the small screen in January with the advent of a new “Kaile’s Korner” segment on Fox Channel 23’s “Good Day Maine.” He’s hoping that brings in additional business.
More than that, Warren is seeing positive feedback from people who recognize him on the street. He recently met a man at Lampron Lil’ Mart near his home in North Windham who stopped him and shook his hand.
“The guy said, ‘I’m so proud of you and proud to meet you. When all that crap came out, you stood proud and you stood up and proved yourself to be right,’ he said. ‘I have a great deal of respect for you,’” Warren said. “So I do get a lot of encouragement, and it helped me get through some of my down times. I was just absolutely devastated for a very long time and it’s taken a long time to get my feet back under me, but I have them back under me now and I’m going to bring justice to this case once and for all.”
He said investors are standing by him, too. Even Lane Hiltunen, the Windham investor who publicly charged Warren with sweet-talking him out of a $10,000 investment with heady promises of big deals with Ace Hardware, is wondering what the future holds for Warren, and his original investment.
“I’m surprised how slow the wheels of the court system turn,” said Hiltunen, also a longtime columnist for the Lakes Region Weekly. “God if this goes another year or so, it’s like I can’t even remember any of the details. It seems like it’s taking an eternity and, of course, I know lawyers for whatever particular reason, love to stall some cases.”
If he wins, Warren promises to repay investors like Hiltunen, just as the consent agreement he signed with prosecutors in 2011 mandates.
“When we win, I’m going to restart the business. This took a lot of life out of me, but I’ve got a lot of life still in me and I want to use it as efficiently and effectively as possible,” Warren said. “The pieces are there to put this shattered company back together, but it’s going to take a lot of time and a lot of resources, and that’s part of the reason I filed this civil action, to give this company the chance to get back on its feet.”
Three years after his indictment on investment-related fraud charges – charges that were dismissed early in 2011 – Windham resident Kaile Warren is trying to rebuild his Rent-A-Husband business, one project at a time. On Wednesday this week, Warren was finishing up some small projects at the Windham home of Susan Conroy, and taking measurements helping her plan a kitchen renovation.
Three years after his indictment on investment-related fraud charges – charges that were dismissed early in 2011 – Windham resident Kaile Warren is trying to rebuild his Rent-A-Husband business, one project at a time. On Wednesday this week, Warren was finishing up some small projects at the Windham home of Susan Conroy, and taking measurements helping her plan a kitchen renovation.
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