SEC Charges Executives in $80 Million Real Estate Ponzi Scheme Targeting Retail Investors and Retirees

WASHINGTON, D.C. — In a sweeping enforcement action that highlights the ongoing vulnerability of retirement savings to sophisticated private fund fraud, the Securities and Exchange Commission (SEC) has filed civil charges against two top executives of a California-based financial services firm. The regulatory body has accused Mark D. Hanf, former Chief Executive Officer of Novato-based Pacific Private Money Group LLC (PPMG), and Hoai-Nam Chu Phan (also known as Nam Phan), former Chief Operating Officer of a PPMG subsidiary, of orchestrating a massive, multi-year offering fraud.

The alleged scheme reportedly targeted approximately 190 retail investors—a significant portion of whom were retired senior citizens depending on fixed incomes—raising more than $80 million under false pretenses. According to the SEC’s complaint, filed in the U.S. District Court for the Northern District of California, the defendants promised lucrative, fixed-income returns tied to real estate-backed loans. Instead, the operation functioned as a classic Ponzi scheme, allegedly sustained by rolling incoming capital into outgoing payments, while the CEO allegedly diverted millions of dollars for personal enrichment.

The civil enforcement action is mirrored by simultaneous criminal proceedings, with the U.S. Attorney’s Office for the Northern District of California announcing parallel criminal charges against both Hanf and Phan. While both defendants have consented to proposed judgments that would permanently bar them from the securities industry, the fallout from the collapse leaves hundreds of investors facing catastrophic financial losses.

1. Main Facts of the Case

The SEC’s formal complaint outlines a systematic deception spanning nearly four years, during which Hanf and Phan allegedly exploited investor trust in real estate investment vehicles to siphon millions and mask operational insolvency.

The Defendants and the Enterprise

Pacific Private Money Group LLC, headquartered in Novato, California, operated as a private real estate lending and investment firm. Mark D. Hanf served as the chief executive officer, steering the company’s public-facing image and overall operations. Hoai-Nam Chu Phan functioned as the chief operating officer for one of PPMG’s key subsidiaries, assisting in the day-to-day management of the private funds and interacting with investors.

The Investment Pitch and Misrepresentations

Between approximately December 2021 and November 2025, Hanf and Phan marketed two specific private funds managed by PPMG. The defendants repeatedly assured prospective and existing investors that their capital would be deployed defensively and productively: specifically, to originate or purchase short-term, high-yield loans secured by real estate.

Furthermore, investors were promised steady, attractive preferred or fixed rates of return generated directly by the interest and principal payments from these underlying real estate loans. For retirees and risk-averse retail investors seeking stable income streams, these pitches were exceptionally compelling.

The Reality: Ponzi Payments and Misappropriation

According to the SEC, the promised real estate lending activities were entirely insufficient to cover the promised yields. Instead of relying on legitimate fund earnings, Hanf and Phan allegedly engaged in a rolling shell game, using new investor capital to make Ponzi-like distribution payments to earlier investors to maintain the illusion of a thriving, profitable enterprise.

Compounding the fraud, the SEC alleges that Hanf brazenly treated the fund as a personal piggy bank. The complaint states that Hanf misappropriated more than $7 million of investor capital directly for his own personal benefit, using commingled funds for unauthorized personal expenditures well outside the scope of the private fund offerings.

2. Chronology of the Fraud and Collapse

Understanding how the PPMG scheme unfolded requires tracing a four-year timeline from its inception during a volatile economic climate to its sudden, catastrophic unraveling in late 2025 and early 2026.

December 2021: Inception of the Defrauding Period

The SEC identifies December 2021 as the starting point of the fraudulent offering period. At this time, interest rate environments were shifting, and alternative yield-generating products were in high demand among retail investors looking for alternatives to traditional, low-yielding fixed-income instruments. PPMG began heavily marketing its two private funds, setting the stage for an influx of retail capital.

December 2021 – November 2025: Perpetuation of the Scheme

For nearly four years, Hanf and Phan allegedly maintained the facade of legitimacy. As initial loans matured or underperformed, the defendants refrained from disclosing these shortfalls to investors. Instead, when distribution deadlines arrived, they funneled capital from newly onboarded investors directly to legacy investors. This period was characterized by aggressive solicitation, reassuring account statements, and the continuous concealment of the widening financial chasm within the funds.

Fall 2025: The Unraveling Begins

The house of cards began to collapse in the autumn of 2025. Macroeconomic pressures, combined with internal cash flow bottlenecks, crippled the firm’s ability to maintain its payment schedule. Alarmed investors increasingly demanded the withdrawal of their principal investments.

However, because the capital had already been dissipated through personal misappropriation, legacy payouts, and unrecovered bad loans, the defendants lacked the necessary liquidity. Requests for redemptions were met with mounting delays, excuses, and ultimately, a freeze on customer withdrawals.

February 2026: The Depth of the Deficit Exposed

By February 2026, the true scale of the disaster came to light. Financial assessments revealed that total outstanding investments across the two private funds hovered at a staggering $121 million. Yet, when auditors and investigators tallied the remaining assets, the total recoverable assets were estimated to be less than $17 million. For the approximately 190 investors caught in the collapse, this translated to an instantaneous vaporization of their hard-earned life savings.

September 2026: Official SEC and Criminal Charges

Following a thorough investigation by the Commission’s regional personnel, the SEC officially filed its civil enforcement action in federal court on September 1, 2026, with public disclosures and updates rolling out through September 2. Simultaneously, federal prosecutors in the Northern District of California unsealed criminal indictments against both executives.

3. Supporting Data and Financial Metrics

The quantitative scale of the PPMG fraud underscores the severe impact that unregulated or loosely overseen private fund offerings can inflict on retail portfolios. The case features several striking financial figures:

• $80+ Million: The total amount of capital raised by Hanf and Phan from investors during the fraudulent period.
• 190: The approximate number of retail investors duped by the scheme, a demographic heavily weighted toward retired senior citizens.
• $7+ Million: The specific sum of investor funds allegedly misappropriated by CEO Mark D. Hanf for his personal use.
• $121 Million: The total outstanding paper value of investments tied up in the two PPMG private funds at the time the scheme broke down.
• Under $17 Million: The total estimated recoverable assets remaining across both funds as of February 2026, pointing to an impending devastation of principal value exceeding 85%.
• 4 Years: The approximate duration of the active fraud, running continuously from December 2021 through late 2025.

4. Official Responses and Legal Ramifications

The regulatory and legal apparatus moved swiftly to hold the defendants accountable, combining civil market bans with federal criminal charges.

SEC Commentary and Enforcement Stance

Jason Lee, Associate Director of the SEC’s San Francisco Regional Office, underscored the human cost of the operation in a public statement following the filing of the complaint.

"This alleged scheme began to unravel in the fall of 2025 as numerous investors demanded to withdraw their money and the defendants did not have sufficient funds to satisfy those requests," Lee stated. "Despite total outstanding investments in the two private funds of almost $121 million, by February 2026 the total recoverable assets of those funds were estimated to be less than $17 million. That amounts to devastating losses for so many investors."

Specific Legal Violations Charged

The SEC’s complaint, lodged in the U.S. District Court for the Northern District of California, alleges severe breaches of federal securities laws:

• Mark D. Hanf is charged with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. These statutes address fraudulent interstate transactions, deceptive practices, and material misstatements in connection with the purchase or sale of securities.
• Hoai-Nam Chu Phan is charged with violating Sections 17(a)(1) and 17(a)(3) of the Securities Act, as well as Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, implicating him directly in the orchestration of the deceptive offering documents and fraudulent fund distributions.

Terms of the Settlement and Judicial Next Steps

Without admitting or denying the SEC’s allegations, both Hanf and Phan have consented to the entry of proposed judgments, pending final court approval. Under the terms of these preliminary agreements:

1. Both defendants will be permanently enjoined from violating the charged provisions of federal securities laws.
2. They will face a broad industry bar, prohibiting them from directly or indirectly participating in the issuance, purchase, offer, or sale of any security—with the sole exception of transactions executed for their own personal investment accounts.
3. The issues of disgorgement (the surrender of ill-gotten gains), prejudgment interest, and civil monetary penalties for Hanf, alongside civil penalties for Phan, have been deferred. These financial remedies will be determined by the presiding federal judge at a later date following formal motions by the SEC Commission.

Parallel Criminal Actions

Beyond the civil framework erected by the SEC, the U.S. Attorney’s Office for the Northern District of California has initiated criminal proceedings against both men. While civil regulatory enforcement focuses on market integrity, asset recovery, and industry bars, the criminal track introduces the very real prospect of federal prison time for white-collar offenses, signaling a zero-tolerance approach to exploitation of vulnerable retail investors.

5. Broader Implications for Private Funds and Retail Investors

The collapse of Pacific Private Money Group and the subsequent enforcement actions cast a harsh spotlight on systemic risks within the private credit and alternative lending sectors.

The Regulatory Blind Spot of Private Funds

Private funds—particularly those operating under exemptions from rigorous registration requirements, such as Regulation D offerings—have historically enjoyed less regulatory oversight than publicly traded equities and registered mutual funds. While these investment vehicles play a legitimate role in the broader capital markets by funding real estate and commercial ventures, their private nature can make them fertile ground for bad actors.

Because financial reporting is often opaque and valuation metrics are self-certified or internally managed, fraudulent operators can mask structural insolvency for years before investors or regulators catch up. The PPMG case underscores the challenges regulators face in detecting offering fraud before the underlying asset pool is entirely depleted.

Risks to Retirees and Retail Capital

Perhaps the most poignant element of the PPMG debacle is its demographic footprint. By targeting retirees and retail investors who lacked institutional sophistication or the resources to conduct deep forensic audits of the fund’s loan books, the defendants allegedly exploited a profound power imbalance.

Retirees operating on fixed incomes are uniquely vulnerable to pitches promising high, secure yields. When vehicles promising safety turn out to be Ponzi schemes, the loss of principal is rarely recoverable through traditional employment or future earnings, leaving elderly victims facing severe lifestyle disruption, loss of independence, and financial ruin.

Industry Takeaways and Future Outlook

As federal courts prepare to finalize the judgments against Hanf and Phan, and as criminal prosecutors build their cases in the Northern District of California, financial advisors and industry watchdogs are calling for increased vigilance.

The case serves as a stark reminder to the investing public that high yields invariably correlate with high risks, and that "guaranteed" or exceptionally stable returns in private real estate lending warrant extreme skepticism. For regulatory bodies like the SEC, the PPMG action reinforces the mandate to aggressively police private markets, ensuring that individuals who prey on vulnerable retail investors face the full weight of both civil and criminal law.