SEC Charges 2 Pacific Private Money Execs With $80 Million Offering Fraud

The Securities and Exchange Commission on September 1, 2026, charged Mark D. Hanf, the former chief executive officer of Novato, California-based Pacific Private Money Group LLC, and Hoai-Nam Chu Phan, the former chief operating officer of a PPMG subsidiary, with orchestrating an offering fraud that raised more than $80 million from approximately 190 mostly retail investors, many of whom were retired senior citizens, according to the agency’s announcement.

The complaint, filed in the U.S. District Court for the Northern District of California, alleges that from at least December 2021 through approximately November 2025, Hanf and Phan, also known as Nam Phan, offered and sold securities in the form of membership interests in two PPMG private funds: Pacific Private Money Fund I LLC, known as the Pacific Fund, and Pacific Freedom Fund LLC, known as the Freedom Fund. According to the complaint, the defendants misrepresented that fund capital would be used to originate or purchase loans secured by real estate and that investors could expect preferred or fixed rates of return from the funds’ real estate lending activities. In reality, the SEC alleges, the defendants regularly used new investor capital to make Ponzi-like payments to earlier investors, and the returns they touted were sourced largely from new investor money rather than from fund earnings. Both funds were unprofitable for a majority of the period, the complaint states.

Fund Structures and Alleged Misrepresentations

Hanf, 65, of Belvedere-Tiburon, California, founded PPMG and launched the Pacific Fund in 2013 and the Freedom Fund in 2020, serving as the primary control person for both, according to the complaint. Phan, 58, of Novato, joined Pacific Private Money, Inc., the primary operating company for the PPMG entities, in October 2016 and was promoted to chief operating officer in 2020. The complaint states that Phan managed day-to-day operations of both funds, communicated with prospective investors, and had access to the funds’ bank accounts and internal financial records.

According to its offering memorandum, the Pacific Fund was to generate returns through loan origination and other loan-related fees, interest income on mortgage loans, and net sale proceeds from asset dispositions, with investors receiving monthly distributions that included an established preferred return plus half of the fund’s excess distributable cash. The Pacific Fund’s manager, Private Money Management Group, LLC, was entitled to a fee equal to 2 percent of assets under management plus 50 percent of excess distributable cash after the preferred return. The Freedom Fund’s offering memorandum described a business of making, purchasing, originating, funding, acquiring, and selling loans secured by real or personal property across the United States with a primary focus in California, emphasizing short-term holding periods, with fixed monthly income distributions payable before manager profit participation.

The complaint alleges the Pacific Fund was not profitable starting with the year ending December 31, 2021, after a large portion of its loans became non-performing and Hanf decided to lend large amounts of the fund’s capital to a single borrower who later defaulted. The Freedom Fund and other PPMG affiliates regularly transferred cash to the Pacific Fund starting at least in December 2021, classified on the entities’ books as short-term loans whose principal and interest were largely never repaid, according to the SEC. The Freedom Fund was likewise unprofitable starting with the year ending December 31, 2022, and from January 2022 it did not generate sufficient cash revenue to cover its expenses, the complaint states.

Despite this, Hanf and Phan continued to solicit new investors, raising approximately $7.3 million from over 60 Pacific Fund investors and approximately $76.5 million from around 130 Freedom Fund investors during the period, the complaint alleges. By August 2022, the Pacific Fund had stopped originating new real estate-backed loans. The SEC alleges the defendants made the misrepresentations in offering documents, marketing materials, emails, in-person meetings, and online webinars. In a February 2023 email, Hanf told a potential investor the Freedom Fund “pays 9% on deposits over $1 million (slightly less on lower amounts), with 30-day liquidity and monthly distributions,” without disclosing that the returns were not from lending activities, according to the complaint.

Alleged Misappropriation and Collapse

The complaint alleges that from at least April 2021 to July 2025, Hanf misappropriated at least $7 million of investor money, transferring it to Hanf Capital LLC, an entity he created and solely owned, and at times to Pacific Realty Development LLC or directly to his personal bank account. According to accounting and bank records cited in the complaint, Hanf used the money to acquire, construct, service debt on, and pay property taxes on real estate holdings; increase his personal equity stake in a new PPMG fund; fund the purse of a boxing match; invest in a purported crypto asset venture; and pay personal living expenses including his home mortgage and credit card bills. Internal records misleadingly characterized the transfers as loans that remained largely unpaid as of the entities’ bankruptcy filings, the complaint states. The SEC also alleges both defendants directed the creation of false account statements, and Hanf directed the creation of false Schedule K-1 tax forms, provided to investors.

By the fall of 2025, the funds were running out of money even with new investor capital, and Hanf and Phan maintained a spreadsheet of outstanding redemption requests, at times prioritizing redemptions for investors most likely to complain, the complaint alleges. In October 2025, both funds ceased paying distributions and redemptions. PPMG engaged a chief restructuring officer in December 2025, and on June 16, 2026, the Pacific Fund, the Freedom Fund, PPMG, and related entities filed for Chapter 11 bankruptcy protection. The complaint states that despite total outstanding investments in the two funds of almost $121 million, by February 2026 their total recoverable assets were estimated to be less than $17 million.

Charges and Consented Judgments

The 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, and 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, Hanf and Phan each consented to entry of a judgment, subject to court approval, permanently enjoining them from violating the charged provisions and from directly or indirectly participating in the issuance, purchase, offer, or sale of any security, except for transactions for their own personal accounts. Disgorgement, prejudgment interest, and civil penalties against Hanf, and civil penalties against Phan, will be determined by the court at a later date upon motion by the Commission. The SEC’s investigation was conducted by staff in its San Francisco Regional Office, and in a parallel action the U.S. Attorney’s Office for the Northern District of California announced criminal charges against Hanf and Phan.