At least $7 million in investor money moved out of two Pacific Private Money Group funds and into accounts controlled personally by the funds’ founder, according to a Securities and Exchange Commission complaint filed September 1, 2026, against former chief executive Mark D. Hanf. The Novato, California-based funds had raised more than $80 million from roughly 190 investors, many of them retired, before Hanf and former chief operating officer Hoai-Nam Chu Phan allegedly ran the funds as a Ponzi-like operation, paying earlier investors with new investor cash while both funds sat unprofitable for years. The complaint separates that broader scheme from a narrower allegation: that Hanf personally pocketed fund money.
How Hanf Capital LLC Received Fund Money
The SEC’s complaint states that from at least April 2021 to July 2025, Hanf transferred money out of the Pacific Fund and the Freedom Fund into Hanf Capital LLC, an entity the complaint describes as one he created, solely owned, and controlled. Hanf Capital performed no work for Pacific Private Money Group or its funds; the complaint says the entity existed to serve Hanf’s own financial interests. Internal fund records classified these transfers as loans to Hanf’s personal entities, a characterization the complaint calls misleading, since investors were never told that both the principal and the interest on those supposed loans went undisclosed and largely unpaid.
Additional fund money reached Hanf through Pacific Realty Development LLC, a second entity he owned outside Pacific Private Money Group, and through direct transfers into his personal bank account, the SEC’s complaint against Hanf and Phan alleges. By the time the funds and their PPMG affiliates filed for Chapter 11 bankruptcy protection in June 2026, the complaint states, principal and interest on the supposed loans to Hanf’s personal entities remained largely unpaid, meaning the fund-to-founder transfers were never substantially reversed before the money ran out.
Phan, who ran day-to-day fund operations and reviewed the same bank and accounting records, is not accused of personally receiving the diverted money. The SEC alleges instead that Phan knew, or was reckless in not knowing, that investor funds were being redirected for Hanf’s benefit, given his access to the funds’ internal financial statements and his participation in meetings on their financial condition. That distinction shapes the two men’s separate charges: Hanf faces an additional securities-fraud count tied to obtaining money through misleading statements, while Phan’s exposure centers on the shared Ponzi-like payment scheme.
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What the Diverted Money Funded
According to the SEC’s complaint, Hanf primarily used the money inside Hanf Capital’s account to acquire, build, and service debt on real estate holdings, and to cover the property taxes on them. The same account also funded an increase in Hanf’s personal equity stake in a newer PPMG fund, the purse for a boxing match, and an investment the complaint describes only as a purported crypto asset venture, none of which the offering documents for the Pacific Fund or the Freedom Fund described as a permitted use of investor capital.
Beyond Hanf Capital, the complaint says Hanf used misappropriated investor money to cover personal living expenses directly, including his home mortgage payment and his personal credit card bills. None of these expenditures were disclosed to Pacific Fund or Freedom Fund investors, whose money had been solicited under offering memoranda that described real estate-secured lending, not Hanf’s personal finances, as the funds’ sole business. Investors were also told they could expect preferred or fixed rates of return tied to that lending activity, representations the complaint says were misleading throughout most of the funds’ history.
Those same investors, along with others in the Freedom Fund, supplied the bulk of the more than $80 million that PPMG’s two flagship funds raised from roughly 190 people, most of them retail investors and many of them retired, according to the SEC’s press release announcing the case. The Pacific Fund raised about $7.3 million from more than 60 investors, and the Freedom Fund raised roughly $76.5 million from about 130 investors, figures that put the $7 million-plus Hanf allegedly routed to himself in the range of the smaller fund’s entire investor base.
The complaint also alleges that Hanf directed the creation of false account statements and Schedule K-1 tax forms sent to investors, documents that purportedly reflected legitimate returns and income generated from the funds’ real estate lending business. Those records, the SEC says, reinforced a false impression that Hanf’s personal transfers were ordinary fund activity rather than a diversion of capital investors never approved, and they helped the Ponzi-like payments continue for roughly four more years before the funds ran out of cash to pay redemptions.
A Consent Judgment, With Penalties Still Undecided
Hanf and Phan have each agreed to resolve the SEC’s civil case without admitting or denying the allegations, consenting to entry of judgments that remain subject to a federal judge’s approval, according to the SEC’s litigation release on the case. The proposed judgments would permanently bar both men from violating the antifraud provisions of the Securities Act and the Exchange Act and would prohibit them from participating in the issuance, purchase, offer, or sale of any security, aside from trades placed for their own personal accounts.
What the consent does not yet resolve is money. The SEC’s complaint asks the court to order Hanf to disgorge his ill-gotten gains with prejudgment interest and to order both men to pay civil monetary penalties, but the complaint itself sets no dollar figure for either. Those amounts are left to further proceedings before the U.S. District Court for the Northern District of California, where the case, filed September 1, 2026, is docketed as case number 3:26-cv-09298.
That leaves an open question for the roughly 190 people who put money into the Pacific Fund and the Freedom Fund: whether any money the court eventually orders disgorged will meaningfully offset what they lost. The complaint notes that as of the funds’ bankruptcy filings, the loans-in-name-only routed to Hanf’s personal entities remained largely unpaid, and disgorgement orders typically reach only whatever assets a defendant still controls, a pool the SEC has not yet described as sufficient to cover the money investors were told was funding real estate loans.
This article was produced with AI assistance and reviewed by The Money Overview editorial team.
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