Rent-A-Husband owner Kaile Warren deflects blame to Preti Flaherty lawyers, whom he said should be put on trial instead.

WINDHAM–Kaile Warren, the former Windham town councilor and Rent-A-Husband founder indicted for investment fraud, is going on the attack, lashing out at the assistant attorney general prosecuting his case and making further allegations against his former law firm.

Warren, who was arraigned in Cumberland County Superior Court Wednesday on new charges regarding the manner in which he solicited investments for his foundering handyman company, says the state prosecutor, Assistant Attorney General Michael Colleran, is “overzealously” going after the wrong guy, and that “if he had the courage, he’d go after” several lawyers at Portland-based Preti Flaherty, whom Warren said are at fault because they devised and actively managed loan programs for Warren’s company.

“If attorney Colleran believes in the charges he’s brought forward, then he ought to go indict the four attorneys at Preti Flaherty, not me,” Warren said during a break in court proceedings on Wednesday afternoon.

Warren named Preti Flaherty lawyers Brian Connolly, Timothy Bryant, Harold Pachious and Naomi Sakamoto, whom he said drafted the investment agreements for Rent-A-Husband’s many investors. To highlight his innocence, Warren said that he had nothing to do with one of the transactions, saying instead that Bryant inked the deal on his own, with no input from Warren.

“Timothy Bryant did the note with (investor) Kenneth Fill. It was completely done on his own. I never wrote to him, never spoke to him, and he’s in my indictment. So if it’s theft by deception and securities fraud, why am I the only one on trial? I would love to have Attorney Colleran answer that,” Warren said.

Preti Flaherty declined to comment on Warren’s allegations. In February, Preti Flaherty managing partner Jonathan Piper issued the following statement regarding the issue: Warren “has apparently expressed the position that his legal difficulties may be attributed to the actions of this law firm, and not to his own…His statements about his former lawyers appear to be part of the defense that Attorney Lilley will be offering at trial. We would prefer not to make further comment for fear of prejudicing Mr. Warren’s defenses to the charges against him.”

Warren’s current attorney, Darrick Banda, assistant to Daniel Lilley, said Fill is one of several on the list of investors detailed in the indictment that could make convincing witnesses for the defense when the case goes to trial, which is now on track to take place in the fall.

“There are people on this list that no investigator from the AG’s office or securities commission has even talked to. And yet they were just sort of lumped in. There are people on this list who don’t feel they should be on the list, so they’re going to make interesting witnesses when the state calls them for trial because they’re going to say, ‘I wasn’t deceived at all,’ and yet they’re included,” Banda said regarding the list of investors the state has compiled as part of the indictment, investors whom the state says were deceived by Warren’s claims that the company was fiscally sound.

Warren’s lawyers claim that Preti Flaherty was the brains behind the investment strategy that raised millions for Rent-A-Husband over the last decade. And that claim will no doubt play an important part of Warren’s defense at the upcoming trial.

“This whole note program, this whole fundraising idea, was devised by Kaile’s previous lawyers at Preti,” said Banda. “They came up with this fundraising idea. They came up with the program and they researched the securities laws and they told (Warren) how to go about it. I don’t see how (the state) gets around not prosecuting his lawyers, because they were the ones who specifically researched the securities law and told him he could do it. I mean it’s pretty simple. He’s a handyman.”

Colleran said the state would be limiting its comment regarding Warren, so as not to play the case out in the media. He did say the state’s case is strong and that Warren, as alleged in the indictment, met with investors and misled them about the company’s fiscal health.

In past interviews , local investors Lane Hiltunen and Peter Forbes, both of Windham, said Warren met with them personally to solicit loans in the amount of $10,000 each and that Warren never presented them with any sort of documentation regarding risk or the financial health of the company. Other investors, such as Joanne Grace of Kennebunk, have issued similar statements.

NEW CHARGES

Colleran last week also brought new charges against Warren based on Warren’s testimony before the 23-member Cumberland County grand jury on April 8. The new “superceding indictment” accuses Warren of failing to disclose to new investors that he had been sued previously for selling unregistered securities and that he had been advised by his lawyer to stop selling promissory notes. Colleran said the two new allegations are in addition to the original counts of theft by deception, securities fraud and sale of unregistered securities, which could send Warren to jail for a maximum of 10 years.

“With respect to the allegation regarding him being sued in the past, he failed to disclose to investors that he had been sued for securities fraud and that he failed to disclose Rent-A-Husband’s true financial condition and sale of unregistered securities in the past. The allegation is that he should have disclosed that to his new investors,” Colleran said.

But Warren’s legal team is expecting Warren will beat the charges when the case goes before a jury. Banda said the theft by deception charge could disappear when details come to light at trial regarding an escape clause of sorts in the investment contracts, which when enacted, could convert all Rent-A-Husband investments to membership shares in the company. In other words, if Warren couldn’t repay the money owed, Banda said, the subscription agreement was written in such a way that gave Warren an out should he default on payments.

“What that means is there’s no theft because all of these investors would own a piece of Rent-A-Husband. No one has exercised that yet, but that’s one of the reasons why we say, just on the face of things, there’s no theft, but also that there was no deception because subscription agreements were made and investors were made aware of the risk,” Banda said.

State prosecuting attorney Michael Colleran, in background, listens Wednesday afternoon as Rent-A-Husband owner Kaile Warren, middle, and his lawyer Darrick Banda plead not guilty to additional charges regarding Warren’s alleged misleading of investors.
Staff photo by John Balentine