Jan 20, 2025
In California, tiny homes are seen as one solution to the affordable housing crisis. But the tiny-home dream has turned into a nightmare for customers of Multitaskr, a company that collected millions in down payments for tiny homes before it shuttered in September 2024.
Several customers took out loans of up to $300,000 from lenders associated with Multitaskr for tiny homes that were never built, leaving them on the hook for loans with no tiny homes to show for it.
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San Diego State University business professor Victoria Krivogorsky is one of them. She told ABC News 10 San Diego she took out three loans from lenders Multitaskr recommended to pay for a home that was never built.
She has paid down one of these loans with $100,000 from her retirement savings, but is under pressure to pay another.
“I don’t know what I’m going to do. I ruined what I had,” Krivogorsky told ABC News 10. “It is very embarrassing.”
Now Krivogorsky and other customers are taking action. They’ve filed complaints with California’s attorney general, the San Diego County district attorney and the FBI. They complained to the Contractors State License Board, which suspended Multitaskr’s license in October. Lawyer James Diefenbach is representing 87 Multitaskr customers who are suing for losses, estimated at anywhere from $15 million to $48 million.
They allege Multitaskr and 10 separate lenders engaged in fraud, conspiracy, negligence, intentional misrepresentation and even elder abuse. Diefenbach told ABC News 10 that the company hooked would-be clients with a slick presentation.
“They had all kinds of charts and graphics on how much money you could generate and balancing that out against the loan and made it seem like this was a good investment,” he said.
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In a court filing, Multitaskr’s chief executive Joe Frausto has denied any wrongdoing. Meanwhile. ABC 10 reports that at least two of the lenders for the project — Mosaic and Dividend — have helped some Multitaskr customers by cancelling their loans.
3 red flags when investing in new-home construction
Here are three things to beware of whether investing in a new tiny home, condo or house.
1. Lack of clear communication. It might be a sign of trouble if the builder or contractor is vague about project timelines, cost breakdowns or other construction details. Always get clear written agreements before taking out loans or handing over cash.
2. Multiple lenders or unfamiliar lenders. Be wary if you're encouraged to take out loans from several different sources or unfamiliar lenders. Stick to trusted sources like a bank or local credit union to keep the process straightforward and transparent.
3. No managed escrow account Watch out for builders who ask for full payment upfront or for money to be deposited directly into their business account. Most trustworthy builders will use a managed escrow account, which releases funds to them as project milestones are met. Without a managed escrow service, you risk paying for incomplete or subpar work.
Katherine Peoples is the founder of HPP Cares, a non-profit that is currently supporting frustrated Multitaskr customers in their efforts to recover losses. She notes that there was no managed escrow service in the Multitaskr case.
“That was the biggest problem,” Peoples told ABC News 10. “It went directly into the business account, and then went wherever it went.”
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
