Rent-A-Husband's CEO Warren with attorney Lilley /WCSH6 video

PORTLAND, Maine – Eighteen days prior to trial, the Attorney General’s Office dismissed all criminal charges with prejudice effective immediately against Kaile Warren, Jr. and his Rent-A-Husband company in light of evidence.

The state’s consent agreement concludes that the matter should now be dealt with by a civil enforcement action against his former law firms and with Ace Hardware, which pulled out of a partnership deal with Warren after a seven-year relationship. 

“It became increasingly clear from law firm documents that Mr. Warren had been given erroneous and seriously misleading legal advice by his lawyers during the several years Mr. Warren was trying to fund and build a national franchise,” Warren’s attorney Daniel G. Lilley stated in a press release.

Warren, through his attorneys, provided evidence to the state showing that alleged violations of Maine’s criminal law were not intended but were the product of inappropriate legal advice from Preti Flaherty Beliveau & Pachios LLP and Marcus Clegg & Mistretta PA during the years he was pursuing investors to fund his national franchise network.  

State prosecutor Assistant Attorney General Michael J. Colleran had been aggressively pursuing legal action against Warren for the past two and a half years. Today, Colleran refused to make comment but issued this statement: “I can confirm that the State has entered into an agreement with Kaile Warren under which the Cumberland County Superior Court entered a civil consent judgment against Mr. Warren and his companies for violations of Maine’s securities laws.  The judgment requires Mr. Warren and his companies to pay restitution in the approximate amount of $1.9 million.  As part of the agreement, after the Court entered the civil judgment the State dismissed the criminal charges against Mr. Warren.”

As part of his agreement with the state, Warren is not required to make any admissions of guilt or liability to any violations of criminal or civil law. Lilley said the major thrust of the agreement is that Warren pursues a civil action for money damages to reimburse his investors for their losses. “He intends to file suit against Preti Flaherty, Marcus Clegg& Mistretta and the Ace Hardware Corporation for all the losses they have caused him, his company and most importantly his investors. He has always wanted his investors who believed,” Lilley explained. 

In January 2010, Warren emphatically declared that the state’s prosecutor was overzealously going after the wrong person. “. . . 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 his company. Warren was quoted saying, “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.”

At that time, the handyman-turned-celebrity also blamed Ace Hardware corporate executives for blatant misstatements regarding a potential joint venture between his company and the retail giant. Ace had worked with Rent-A-Husband since 2003 on a partnership that would have ramped up his business across the country.

The press statement from Lilley further states that from 1999 to 2008 Preti Flaherty advised Kaile Warren and his company on the legal ins and outs of financing, securities and franchising, assuring him they were properly stewarding him through the legal process. “Senior partner, Harold Pachios, had even personally signed for a $100,000 interest in Rent-A-Husband on behalf of the Preti Flaherty firm in 2002. Unbeknownst to Mr. Warren, the legal counseling he was receiving was seriously flawed.”

When Warren began seeking funding from the Small Business Administration in 2007, an attorney from the agency inquired of the Preti law firm whether Warren was in compliance with Maine’s securities law in seeking investors. Preti Flaherty then abruptly withdrew from representing Warren and his company citing a potential and sudden conflict of interest. The firm refused to give SBA a compliance letter that would have required them to put in writing that his actions were appropriate under the law during their representation.

Warren then retained Marcus Clegg & Mistretta and its attorneys advised him to waive his constitutional rights and submit to extensive interviews with a Maine Securities investigator. That firm subsequently convinced Warren to sign a written waiver irrevocably giving up all his attorney-client confidentiality privileges at the behest of Preti Flaherty through their lawyer, Gerry Petruccelli, who had drafted the waiver. “That then paved the way for Preti Flaherty partner Tim Bryant, who had been the point man to Warren during the Preti-Flaherty representation, to testify in a criminal Grand Jury against his former client. Bryant’s testimony before the Grand Jury was vague, inaccurate, misleading and damaging to Mr. Warren,” the Lilley press release states.

Retail Giant’s Withdrawal

 Ace Hardware, a Fortune 500 corporation, at one point, had all but inked a deal with Warren to partner with Rent-A- Husband starting with 1,500 of its 5000 stores across the country. Preti Flaherty’s sudden withdrawal as counsel and the resulting inability to obtain SBA funding, because of Preti Flaherty not supplying a letter of compliance with securities law, caused a domino effect.

Lilley stated, “Ace, in its own self interest, distanced itself from Warren and Rent-A-Husband. They published misleading press statements about their relationship with Rent-A-Husband and Warren. During the seven year association Ace had with Warren and his companies, Ace extensively market tested the Rent-A-Husband franchise in several states and documented it and touted it to be the best model in the country by far for home handy man repairs and projected it to a be a $500M company.”

Once Preti Flaherty had abruptly withdrawn and Ace had distanced itself with negative press releases, investors, new and old, became nervous and concerned. Some contacted the state. The state reacted by taking the case to three Cumberland County grand juries. 

Lilley stated, “Warren was indicted and arraigned several times for criminal securities violations and fraud, with all the attendant publicity. These criminal charges were the final blows that destroyed Rent-A-Husband and Warren’s reputation.”

The two firms that worked with Warren issued statements to media on Wednesday.

Jonathan Piper, Managing Partner at Preti Flaherty said, "We are pleased, for Mr. Warren, that the state has seen fit to dismiss the criminal charges against him. However, since he and his attorney have announced their intention to sue the firm, and a number of others, we will not be publicizing the numerous defenses to the allegations in Attorney Lilly's press release."

Lee Bals of Marcus,Clegg & Mistretta stated, ;"[Our firm]...did nothing wrong or inappropriate in its representation of Kaile Warren. Indeed what the firm advised Mr. Warren to do was work with the state to try and reach an agreement with respect to his businesses, without any admission of guilt or liability, the very result his current lawyer has apparently worked with him to accomplish. Marcus, Clegg and Mistretta had nothing to do with the state's decision to pursue criminal charges against Mr. Warren, nor its recent decision to dismiss those charges."

Ace Hardware did not respond to requests for interviews.

Multimedia:

• PHOTOS: A letter from Maine's assistant attorney general to investors of Rent-A-Husband franchises over this legal action
• VIDEO: Kaile Warren and his attorney interviewed by a local television station

Related Articles:

• Rent-A-Husband Fall from Grace
• Rent-A-Husband Heads to Court
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• Judge to Rule in Coming Days on Rent-A-Husband
• Judge Dismisses Pertinent Count in Rent-A-Husband Indictment
• Rent-A-Husband's Warren points fingers at Ace, lawyers - Keep Me .
• Rent-A-Husband founder indicted on felony charges - ABC News
• Rent-A-Husband founder indicted on felony charges – USATODAY
• Handyman Blues (Franchise Times Magazine: February, 2010)