Kaile Warren, Windham resident and founder of the national Rent-A-Husband handyman company, has thrived on national publicity to create a name for himself and his company. In recent months, however, the attention Warren is receiving is more scrutiny than praise.

The manner in which Warren has sought investments in his company, originally covered in the Lakes Region Weekly in early September, is drawing attention from a number of sources, as well as an investigation from a state agency that probes investment-related fraud.

And locally, Warren’s failure to disclose financial dealings with constituents while a member of the Windham Town Council in 2007 and 2008 has drawn strong criticism as well.

Last week, Warren, of 16 Gin Mill Lane in North Windham, was the subject of a lengthy USA Today newspaper investigation that raised questions of Warren’s credibility. The Oct. 21 article on the front page of the newspaper’s Money section featured interviews with multiple investors across the country who had loaned Warren significant amounts of money to be invested with Rent-A-Husband. In the article, those investors said Warren had misled them regarding Rent-A-Husband’s financial health.

Investors such as Kennebunk’s Joanne Grace, who sank about $125,000 into the company, said Warren told her Rent-A-Husband was profitable, while financial records obtained by USA Today indicated Warren’s company had failed to turn a profit for several years and always has floundered on the edge of bankruptcy, despite the national exposure Warren received from the press and television media.

Warren denies any wrongdoing regarding Rent-A-Husband investments. In a prepared statement issued Wednesday, Warren called into question the USA Today reporter’s credibility and indicated another major news outlet is currently preparing a rebuttal to the scathing article. He wrote in an e-mail:

“There is now a national news organization working on a story that will address the erroneous reporting within the USA Today story. USA Today reporter Jayne O’Donnell’s checkered past appears to have colored her perception of reality. O’Donnell came up with false information and littered the feature with it. The false information is information she knew or should have known to be false. False, understated and omitted information renders the Rent-A-Husband feature less than credit worthy. Reporter Jayne O’Donnell’s conduct and work on this feature should come under review by management at USA Today and any appropriate disciplinary actions should be taken. There will be further comment when the corrected news story becomes public.”

State investigation

But it’s not only the second-most read newspaper in the nation probing Rent-A-Husband. Investors’ accusations of fraud, wherein Warren would allegedly lure new customers by touting the financial strength of Rent-A-Husband, are now being investigated by the state of Maine.

Chris Caruso, an examiner/investigator with the Maine Office of Securities, is conducting interviews of Warren’s numerous investors around the state, including Windham residents Christian and Colleen Olsen, Lane Hiltunen and Peter Forbes. While the probe has been ongoing for about a year, Caruso and other investigators have been holding follow-up phone interviews with the investors this week.

“Our office, the Maine Office of Securities, does have an open investigation into Mr. Warren and Rent-A-Husband. Beyond that, our investigations are confidential so I am unable to provide any additional information,” said Judith Shaw, administrator for the agency.

Shaw said the agency’s investigations, which could lead to civil or criminal charges based on findings, “tend to be detailed and complex, as well as document-intensive.” She said Warren’s case involves a “substantial number of investors.”

While the Olsen family has declined comment due to an active civil lawsuit they’ve filed against Warren in Cumberland County Superior Court, Hiltunen and Forbes both confirmed they had spoken to Caruso on Monday.

“Yes, I did have a second interview over the phone. It was sworn testimony so what I said could be used as evidence … They asked me questions about the investment,” Hiltunen said.

Hiltunen, a disabled Army veteran and Lakes Region Weekly political columnist, invested $10,000 with Warren in January 2009 and said Warren promised full repayment plus 20 percent after one year.

Peter Forbes, a real estate broker at ERA Today in North Windham who invested $10,000 with Warren in May 2008, offered sworn testimony to the state agency, as well. When he signed the money over to Warren in May 2008, Forbes said Warren promised to return his money in full plus 20 percent interest by May 2009. Forbes hasn’t “seen a nickel.” But he also hasn’t given up hope he’ll recoup the loan.

“As far as I’m concerned, this note I have with him, I’m still owed 20 percent per year until I get my money back. (Next May) it’ll be up to $14,500,” Forbes said.

In a September interview on the subject of Forbes’ loan, Warren said he would try to repay Forbes $1,000 by the end of the week. That payment never came through, Forbes reported this week.

“I got nothing, that’s what I got. And since then, (Warren) won’t return my phone calls or e-mails,” Forbes said.

Forbes said he did business with Warren partly because he said Warren promised a bright future for Rent-A-Husband. Forbes said Warren touted a brewing venture with Ace Hardware that would broadcast the Rent-A-Husband name throughout the country and open franchises within Ace Hardware stores. Forbes thought the investment sounded “like a no-brainer,” but since has learned from Warren’s statements to the USA Today that the Ace deal was already dead by May 2008, when Forbes invested.

“Basically, in that interview with USA Today, he said the investors knew what they were getting into, that these (investors) were given and had signed disclosures saying these were high-risk loans. That’s bull,” Forbes said. “What really happened was that in May of ’08 he told me the Ace venture was still a go.”

Trusted councilor

Forbes said he also “got sucked in” by the fame Warren had gained both nationally as a television personality – he appeared on CBS’s “The Early Show” as a home improvement expert, was a three-time guest on Oprah, and appeared in major daily newspapers and magazines. He was also impressed with Warren’s local stature as a fiscally prudent and tough-on-taxes town councilor.

“Oh certainly, he played the trusted town councilor card. It was part of his little speech trying to get me to invest,” Forbes said.

Warren served as a town councilor from June 2007 to December 2008, when he had to resign after suffering two heart attacks. During his term, Warren was a voice of conservatism, regularly digging up issues of excessive spending within Windham government, the most notable of which was repair work performed on town vehicles at Portland North Truck Center in Falmouth, work that Warren argued could have been done more cheaply.

Ironically, Warren is also remembered by one fellow councilor for speaking out in favor of expanding the scope of a Windham statute requiring elected committee members to disclose financial transactions with Windham residents in excess of $1,000.

Carol Waig, now the council chairwoman, said Warren wanted everyone in town government to disclose the information, not merely town councilors and members of the school board, planning board and zoning board of appeals as required by a 1991 town charter amendment.

“He got a lot of employees upset with this, actually,” Waig said. “This disclosure form was only meant for volunteers on the elected boards, but he wanted everyone to do it. So here he was pushing onto everyone else something he didn’t even bother adhering to himself.”

Waig is referring to Warren’s failure to disclose the deals he made with Forbes and the Olsen family, both of which occurred in 2008 and which totaled hundreds of thousands of dollars. (Hiltunen’s deal was brokered in January of 2009, after Warren left the council.)

Waig said the council spent time reviewing a proposal to expand the disclosure requirement to include members of appointed boards, a cause Warren enthusiastically supported, she said. “The ethics board came before us and in the process we talked about the importance of the disclosure statement,” Waig said. “Kaile Warren was all for it. And now to find out he didn’t even file one?”

Waig also remembers Warren siding with the Olsen family when they expressed concern about a proposal to build a community park that would include a BMX track adjacent to the Windham Skate Park on Route 202 across from the Olsens’ property. “He sat there with Christian and Colleen Olsen and backed them up,” Waig said. “Now, did he do that because he was on their side? Or did he just do that because he wanted to do business with them?”

Forbes is likewise suspicious of why Warren would fail to publicize the substantial dealings with Windham constituents.

“As a town councilor, it was his ethical and legal obligation to disclose those financial transactions,” Forbes said. “And not only did he fail to disclose them, he used his position as a town councilor to encourage people to invest in his company.”

‘I do not recall’

When asked in a phone interview with the Lakes Region Weekly in September why he failed to disclose the 2008 transactions, Warren first answered, “I do not recall.” He later left a message saying the failure was due to his heart attacks in December 2008. But town councilors who served with Warren were surprised to hear Warren blame his illness, since the disclosure form was due in July 2008.

“Those (disclosure forms) were supposed to be signed in July,” Waig said. “Warren didn’t have health problems until December. I’m not quite sure what (Warren’s) talking about. He had plenty of time.”

Blaine Davis, who resigned from the council earlier this year to move to Florida for career-related reasons, said he believes the transparency that results from having to disclose business transactions is important to properly functioning government.

“I think it’s important for councilors to disclose,” said Davis. “If you check my disclosure forms, you’ll see that mine were pretty lengthy. Having been in advertising sales for a local newspaper, I listed both actual and potential conflicts.

“But I’d say yes, transparency and disclosure go hand in hand, and it was frankly one of the things I pushed to see more of at the council,” he said.

Davis said he was a couple weeks late with handing his in to the town clerk in 2008 because he needed extra time to compile the list. “It’s crucial that it’s done and done right,” he said. “But they would hound you if you didn’t turn it in, the town clerk and the manager. It’s not something I can see them letting fall through the cracks.”

“It is kind of curious,” added Councilor John MacKinnon. “The way I feel about it is this: The last thing any councilor should do is to take advantage of their position on the council to make business deals for profit.” MacKinnon said the town clerk reminds councilors “constantly” to fill out the disclosure form as soon as they are elected. “Yeah, definitely, it’s something he should have done. Linda (Morrell) keeps reminding us. It’s not like he wasn’t made aware,” MacKinnon said.

Slow to submit

“I’ll normally mention it at the start of a meeting. I’ll tell them nicely they still need to come in and fill out the paper. It can take a while to get everybody’s in but I eventually do,” Town Clerk Linda Morrell said.

According to the section dealing with the annual disclosure statement in the Windham Municipal Code of Ethics, “each elected official shall file a completed disclosure statement with the Town Clerk within 15 days after each annual municipal election. Each appointed official shall file a completed disclosure statement with the Town Clerk within 30 days after his/her appointment.”

“Unlike everyone else, (Warren) never came in and updated it for 2008. He submitted one for 2007, but he never did one for 2008. He’s supposed to do that,” Morrell said.

According to Ken Cole, Windham’s town attorney for the past 20 years, the issue of non-disclosure has never arisen before, “This is the only one I’m aware of,” he said.

Cole said Windham is the only town in Maine that he’s aware of that has a statute governing financial disclosures of the members of the four elected boards. “It’s unique to Windham,” he said.

Regarding penalties for someone who fails to disclose, “The only teeth (the statute has) is that the council can censure you, but with him already being off the council, that’s irrelevant … You can only be removed by voters,” Cole said.

Conflict of interest

Beth Richardson, a business ethics curriculum developer and business administration professor at St. Joseph’s College in Standish, said Windham’s requirement that elected leaders fill out financial disclosures “points straight to the larger issue of conflict of interest.”

“These types of disclosures are put in place because the town wants to make sure there’s no conflict of interest between the councilors and the constituents. That is the only reason a town would impose these rules, and it is an important reason,” Richardson said.

Richardson said a long history exists – dating back to English common law post-Henry VIII – of elected leaders in democratic societies having to disclose financial dealings with the public. At its heart, Richardson said, even perceived conflicts of interest are damaging because “voters lose confidence in their elected leaders.”

“It’s pretty critical, and certainly not something to be taken lightly. It’s all about doing what’s best for the town, not what’s best for the elected individual. The goal is pure objectivity,” Richardson said.