The Securities and Exchange Commission has charged the former chief executive of a Novato, California, real estate lending firm with running an offering fraud that pulled in more than $80 million from roughly 190 investors, many of them retired. Regulators say Mark D. Hanf and a subsidiary’s former chief operating officer told investors their money would fund real estate loans, then used fresh investor cash to pay off earlier backers while Hanf siphoned off more than $7 million for himself. By the time the scheme collapsed, recoverable assets covered only a fraction of what retirees had put in.
How the Pacific Private Money Scheme Worked
According to the SEC’s complaint, filed in the U.S. District Court for the Northern District of California, Hanf and Hoai-Nam Chu Phan operated two private funds under Pacific Private Money Group from around December 2021 through November 2025. The two men told investors their contributions would go toward originating or purchasing loans secured by real estate and promised preferred or fixed rates of return tied to that lending business. Instead, the agency alleges the funds regularly used newer investors’ money to make Ponzi-style payments to those who had invested earlier, with the advertised returns coming largely from that recycled cash rather than from any real estate lending profit.
The scheme began to unravel in the fall of 2025 as numerous investors demanded their money back and the defendants could not cover the requests, Jason Lee, associate director of the SEC’s San Francisco Regional Office, said in the agency’s announcement. Total outstanding investments across the two funds reached almost $121 million, according to the SEC, but by February 2026 the funds’ recoverable assets were estimated at less than $17 million. The commission separately alleges Hanf personally misappropriated more than $7 million of investor money for his own benefit, on top of directing the alleged Ponzi-style payment structure.
The specific violations named in the underlying securities filing show the case is being pursued on two fronts at once. Hanf is charged with violating the anti-fraud provisions of both the Securities Act of 1933 and the Securities Exchange Act of 1934, while Phan faces a narrower set of the same anti-fraud charges tied to his role as the subsidiary’s chief operating officer. Both men consented to a judgment, subject to court approval, that would permanently bar them from the securities industry without requiring them to admit or deny the SEC’s allegations.
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Retirees Bear the Brunt of the Collapse
Roughly 190 people invested in the two Pacific Private Money funds, and the SEC says most were retail investors, with many being retired senior citizens who had entrusted a meaningful share of their savings to what they believed was a conservative real estate lending strategy. That detail matters because retirees generally have far less runway to rebuild savings lost to fraud than someone still years from retirement, and a real estate lending fund marketed as low-risk is exactly the kind of investment older savers are told to favor over volatile stocks.
The financial hole extended well beyond individual investors. Pacific Private Money and its affiliated entities filed for Chapter 11 bankruptcy protection in the Northern District of California in June 2026, a move that typically slows any effort by defrauded investors to recover what they put in while a bankruptcy court sorts out competing claims on the remaining assets. With total investments near $121 million against recoverable assets estimated at under $17 million, most investors are likely to recover only a small share of their original contribution even after the bankruptcy and enforcement proceedings run their course.
For a retiree who relied on the promised fixed returns as part of a fixed-income budget, that kind of shortfall is not an abstraction. Losing even a portion of a six-figure retirement allocation can force a retiree back into the workforce, delay a Social Security claiming decision made under the assumption those savings existed, or require selling a home earlier than planned. The SEC’s enforcement action does not undo that damage; it only aims to stop the alleged conduct from continuing and to extract whatever penalties a court eventually orders.
Criminal Charges Follow the SEC’s Civil Case
The same day the SEC filed its civil complaint, the U.S. Attorney’s Office for the Northern District of California brought parallel criminal charges accusing Hanf and Phan of wire fraud conspiracy, with Hanf separately charged with money laundering. Prosecutors allege the pair knew as early as 2021 that several of the fund’s largest projects were losing money, yet continued soliciting new investors without disclosing the trouble, and that Hanf moved money between the investment funds to keep them afloat as the losses mounted.
If convicted, Hanf faces a maximum of 20 years in prison on the wire fraud conspiracy count and up to 10 more years on the money laundering charge, while Phan faces the same 20-year maximum on the conspiracy count alone. Both men are scheduled for change-of-plea hearings before a federal judge later this month, a step that typically signals negotiations over a guilty plea are underway even though both had previously entered not-guilty pleas at their initial court appearances.
Whether the criminal case produces a plea deal or a trial, it will not by itself return money to the roughly 190 people who invested in Pacific Private Money’s funds. Any restitution or asset recovery will run through the bankruptcy proceeding and the SEC’s separate disgorgement claim, a process that regulators acknowledge could leave devastating losses in place for investors who believed they had made a safe, income-generating bet on real estate lending rather than on the two executives now facing prison time.
This article was drafted with AI assistance and edited for accuracy.
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