Introduction
This note records our thoughts on a public civil enforcement action announced by the United States Securities and Exchange Commission (the “SEC”) concerning Mark D. Hanf, the former chief executive officer of Novato, California-based Pacific Private Money Group LLC (“PPMG”), and Hoai-Nam Chu Phan, also known as Nam Phan, the former chief operating officer of a PPMG subsidiary. It is written in continuous prose with short section headings in a formal DIFC-style presentation: figures for dates and amounts, and no bullet-point lists.
The commentary under “Our thoughts” below is that of Attorney at Law – Dr. Jur. Marius R. Stef and L&S Law Firm Ltd. The factual narrative under “Background” and the following sourced sections is drawn only from the named public sources listed at the end of this note. Nothing herein is a finding of fact or a determination of liability.
The matters described by the SEC remain civil allegations unless and until a court enters a final judgment that expressly adjudicates them. A parallel criminal information has also been announced by federal authorities; those criminal charges are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.
Background
On 1 September 2026 the SEC announced that it had charged Hanf and Phan with orchestrating an offering fraud that, according to the Commission, raised more than USD 80 million from approximately 190 mostly retail investors, many of whom were retired senior citizens. The civil complaint was filed in the United States District Court for the Northern District of California as Securities and Exchange Commission v. Mark D. Hanf and Hoai-Nam Chu Phan a/k/a Nam Phan, No. 3:26-cv-09298 (N.D. Cal. filed 1 September 2026).
The SEC later summarised the same action in Litigation Release No. 26627 dated 4 September 2026.
According to the SEC’s complaint, from approximately December 2021 to November 2025 Hanf and Phan misrepresented to investors in two of PPMG’s private funds that investor capital would be used to originate or purchase loans secured by real estate, and that investors could expect to receive preferred or fixed rates of return from the funds’ real estate lending activities.
The SEC alleges that, instead, Hanf and Phan regularly used new investor capital to make Ponzi-like payments to prior investors during that timeframe, and that the returns they touted were sourced largely from new investor money rather than from fund earnings connected with real estate lending. The Commission further alleges that Hanf misappropriated more than USD 7 million of investor funds for his own personal benefit.
Jason Lee, Associate Director of the SEC’s San Francisco Regional Office, is quoted in the Commission’s 1 September 2026 press release as stating that the alleged scheme began to unravel in the autumn of 2025 as numerous investors demanded to withdraw their money and the defendants did not have sufficient funds to satisfy those requests. According to that same SEC announcement, despite total outstanding investments in the two private funds of almost USD 121 million, by February 2026 the total recoverable assets of those funds were estimated to be less than USD 17 million.
The civil charges and the consented relief as framed by the SEC
The SEC’s complaint charges Hanf with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It charges Phan with violating Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Without admitting the allegations in the SEC’s complaint, Hanf and Phan each consented to the entry of a judgment, subject to court approval, that would permanently enjoin them from violating the charged provisions of the federal securities laws and from directly or indirectly participating in the issuance, purchase, offer, or sale of any security, except for purchases or sales for their own personal accounts. Disgorgement, prejudgment interest, and civil money penalties against Hanf, and any civil penalties against Phan, would be determined by the Court at a later date upon motion by the Commission.
Parallel criminal proceedings as framed by federal authorities
Separately, federal authorities announced that an information filed on 31 August 2026 by the United States Attorney for the Northern District of California charged Hanf and Phan with wire-fraud conspiracy, and charged Hanf additionally with money laundering. According to an Internal Revenue Service Criminal Investigation (“IRS CI”) announcement dated 1 September 2026, Hanf and Phan made initial appearances in federal court in San Francisco that day and waived indictment.
The IRS CI announcement states that, according to the information, Hanf of Tiburon, California, and Phan of Novato, California, allegedly engaged in a multi-year conspiracy to defraud Pacific Private Money investors by making false statements about the enterprise’s financial condition to induce investment. It further alleges that they knew as early as 2021 that a number of the enterprise’s largest projects were losing money and value, yet continued to solicit investors without disclosing those problems, and that from December 2021 they moved money between investment funds and used new investor funds to pay distributions and redemptions to previous investors.
According to that same IRS CI announcement, Pacific Private Money funds raised approximately USD 103 million from over 175 investors between approximately December 2021 and December 2025, and in June 2026 the Pacific Private Money entities filed for Chapter 11 bankruptcy protection in the Northern District of California. The IRS CI announcement also alleges that part of the scheme involved Hanf transferring funds from the enterprise to another entity that he controlled to pay personal expenses such as credit card bills and home mortgage payments.
Readers should note that the SEC’s civil dollar figures and the criminal information’s fundraising figures are reported by different authorities and should not be blended into a single number. The information merely alleges that crimes have been committed. According to IRS CI, if convicted the defendants face a maximum sentence of 20 years in prison on the wire-fraud conspiracy count, and Hanf faces a maximum of 10 years on the money-laundering count, with any sentence to be determined by the court under the applicable guidelines and statute.
Our thoughts
Private real estate credit funds are often marketed to retail and retired investors as a bridge between “fixed income” comfort and property-secured yield. When preferred or fixed returns are promised against loan books that are said to be originating or purchasing secured lending, the investor diligence question is not whether the story sounds familiar. It is whether the returns are actually earned from performing assets, and whether redemptions can be met without recycling later subscriptions.
The SEC’s account of Ponzi-like payments funded by new capital, alongside an alleged collapse from almost USD 121 million of outstanding investments to less than USD 17 million of estimated recoverable assets, is a reminder that liquidity stress is often the first public signal of a deeper asset and disclosure problem. That observation is commentary. The preceding sections are sourced narrative only.
For boards, family offices, and individual investors evaluating private real estate funds, three practical checks follow from this matter as framed by the authorities. First, insist on independent verification of loan-book performance and of the source of distributions, not only marketing language about preferred or fixed rates. Second, treat senior-management personal use of fund cash as a bright-line red flag whenever bank records or related-party transfers cannot be reconciled to disclosed investment purposes. Third, do not equate a civil settlement consent entered without admission of the allegations with a criminal adjudication; each track has its own standard and its own consequences.
Our firm view is straightforward: if you cannot see how a private fund’s advertised yield is generated from assets rather than from later investors, do not scale exposure — and do not introduce others to that product.
Sources
U.S. Securities and Exchange Commission, SEC Charges San Francisco Bay Area Private Fund Executives with Multimillion Dollar Ponzi-Like Scheme, Press Release No. 2026-82 (1 September 2026): https://www.sec.gov/newsroom/press-releases/2026-82-sec-charges-san-francisco-bay-area-private-fund-executives-multimillion-dollar-ponzi-scheme.
U.S. Securities and Exchange Commission, Litigation Release No. 26627, Securities and Exchange Commission v. Mark D. Hanf and Hoai-Nam Chu Phan a/k/a Nam Phan, No. 3:26-cv-09298 (N.D. Cal. filed 1 September 2026) (release dated 4 September 2026): https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26627.
Internal Revenue Service Criminal Investigation, Founder and CEO of Bay Area real estate investment fund charged in multi-year fraud scheme (1 September 2026): https://www.irs.gov/compliance/criminal-investigation/founder-and-ceo-of-bay-area-real-estate-investment-fund-charged-in-multi-year-fraud-scheme.
Important notice
This article is for general information and investor-education purposes only. It is not legal advice and does not create a solicitor–client (or attorney–client) relationship. Allegations described herein are those of the named public authorities and have not been proven in court unless a final judgment is expressly cited.
Civil consent to judgment entered without admitting the allegations is not an admission of liability. Criminal charges in an information are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt. Readers should consult the primary sources cited above and take independent professional advice before acting.
