SEC and Federal Prosecutors Crack Down on $80 Million Ponzi Scheme Targeting Seniors by California Real Estate Fund Executives

WASHINGTON, D.C. — In a sweeping enforcement action that lays bare the vulnerabilities of retail investors in private credit markets, federal regulators and prosecutors have moved aggressively against the leadership of a California-based private lending firm.

The Securities and Exchange Commission (SEC) announced civil fraud charges today against 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), the former Chief Operating Officer of a PPMG subsidiary. The executives are accused of orchestrating a sophisticated, multi-year offering fraud that extracted more than $80 million from approximately 190 predominantly retail investors—a vulnerable demographic that heavily comprised retired senior citizens seeking stable, fixed-income streams for their golden years.

Simultaneously, the U.S. Attorney’s Office for the Northern District of California unsealed parallel criminal indictments against Hanf and Phan, signaling a coordinated, high-stakes federal effort to hold white-collar executives accountable for defrauding Main Street investors.

According to filings in the U.S. District Court for the Northern District of California, the defendants relied on a classic playbook of financial deception: promising secure, asset-backed yields while covertly operating a Ponzi scheme. New investor capital was allegedly funneled backward to pay off older participants, while millions in investor funds were siphoned off for personal enrichment.

Main Facts of the Case

At the heart of the government’s complaint is a web of deceit woven between December 2021 and November 2025. During this nearly four-year window, PPMG marketed two private real estate funds to the public, heavily promoting them as conservative, income-generating vehicles.

Hanf and Phan assured prospective and existing investors that their capital would be deployed for a specific, low-risk purpose: to originate or purchase real estate-secured bridge loans and hard-money loans. Investors were led to believe that the yields distributed to them—often touted as preferred or fixed rates of return—were the direct product of interest payments and capital gains generated by these underlying real estate lending activities.

The reality, according to SEC investigators, was entirely different. Rather than relying on healthy fund earnings from real estate transactions, the defendants sustained the illusion of profitability through a continuous cycle of incoming capital. As new retail investors poured their life savings into the funds, Hanf and Phan used that fresh money to make Ponzi-like payments to earlier investors, creating a false sense of security and encouraging them to roll over their investments or invest even more capital.

Beyond the Ponzi-style recycling of funds, the SEC’s complaint alleges brazen personal enrichment. Mark D. Hanf allegedly misappropriated more than $7 million of investor money outright, utilizing the pool as a personal slush fund to finance a lifestyle far beyond what his legitimate earnings could support.

The human cost of the alleged fraud is staggering. The victim pool consists largely of retail investors—ordinary people with limited financial sophistication who trusted PPMG with their retirement security. Many of those who invested in the funds were elderly retirees relying on the promised fixed returns to cover essential living expenses, healthcare costs, and housing.

Chronology of the Fraud: From Inception to Collapse

A detailed examination of court documents and regulatory findings reveals a timeline of mounting deception, culminating in a swift and devastating collapse in late 2025 and early 2026.

December 2021 – November 2025: The Accumulation Phase

During this period, Hanf and Phan actively solicited capital for PPMG’s two private funds. By deploying aggressive marketing strategies and leveraging their standing in the local real estate and investment community, the executives raised upwards of $80 million from roughly 190 investors. Throughout these four years, the defendants allegedly maintained the illusion of a thriving enterprise by fabricating success stories and distributing regular "returns" funded entirely by incoming principal from newer investors.

Fall 2025: Liquidity Crunch and the Beginning of the End

The house of cards began to wobble in the autumn of 2025. Facing macroeconomic pressures and a growing number of skeptical clients, multiple investors simultaneously demanded to withdraw their principal investments.

Because the vast majority of the capital had been misappropriated, spent on personal luxuries, or used to pay off prior investors rather than being deployed into lucrative, cash-flowing real estate loans, the funds lacked the liquidity to satisfy redemption requests. Hanf and Phan scrambled to stall investors, offering excuses while frantically trying to source new capital to plug the massive financial holes in the funds’ balance sheets.

February 2026: The Devastating Audit

By February 2026, the true scope of the financial devastation became starkly apparent. While the books indicated that total outstanding investments in the two private funds hovered at a staggering $121 million, an assessment of the funds’ actual, recoverable assets painted a grim picture. Investigators and financial professionals estimated that the total recoverable assets remaining across both funds amounted to less than $17 million.

For the 190 retail investors, this meant that the vast majority of their life savings had vanished, leaving them facing catastrophic, unrecoverable losses just months before federal regulators swooped in.

Supporting Data and Financial Metrics

The quantitative footprint of the PPMG fraud underscores the scale of damage inflicted on the victims:

• Total Funds Raised: More than $80 million extracted from investors between December 2021 and November 2025.
• Total Investor Count: Approximately 190 individual investors, heavily weighted toward retail investors and retired senior citizens.
• Total Outstanding Liabilities: Nearly $121 million in total outstanding investments recorded across the two private funds at the time of collapse.
• Recoverable Assets: Less than $17 million remaining as of February 2026, creating an asset-to-liability deficit exceeding $104 million.
• Personal Misappropriation: More than $7 million allegedly diverted by former CEO Mark D. Hanf for personal use.

Official Responses and Regulatory Enforcement

The coordinated response from federal authorities highlights the severity with which regulatory bodies view affinity fraud and schemes targeting retirees.

Jason Lee, Associate Director of the SEC’s San Francisco Regional Office, did not mince words when discussing the fallout of the PPMG operation.

"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."

Legal Charges and Settlement Terms

In its civil complaint filed in the U.S. District Court for the Northern District of California, the SEC brought severe charges against both men:

• Mark D. Hanf was 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 thereunder.
• Hoai-Nam Chu Phan was charged with violating Sections 17(a)(1) and (3) of the Securities Act, as well as Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Without admitting or denying the SEC’s allegations, both Hanf and Phan consented to the entry of proposed judgments—subject to court approval—that impose severe lifelong restrictions. Under the terms of the proposed consent judgments, the defendants would be:

1. Permanently enjoined from violating the charged provisions of federal securities laws.
2. Barred from participating directly or indirectly in the issuance, purchase, offer, or sale of any security, with the sole exception of trading for their own personal accounts.
3. Subject to financial penalties: The questions of disgorgement, prejudgment interest, and civil money penalties against Hanf, as well as civil penalties against Phan, have been deferred, to be determined by the Court at a later date upon formal motion by the SEC.

Parallel to the civil enforcement actions, the U.S. Attorney’s Office for the Northern District of California announced criminal indictments against Hanf and Phan, ensuring that the former executives will face potential prison time and criminal forfeiture proceedings alongside the SEC’s asset recovery efforts.

Broader Implications for Private Credit and Retail Investors

The PPMG scandal serves as a cautionary tale with far-reaching implications for the broader financial landscape, touching upon regulatory oversight, the private fund market, and the protections afforded to retail investors.

1. The Risks of the Expanding Private Credit Market

In recent years, the private credit and real estate lending spaces have experienced exponential growth. As traditional banks tightened lending standards following various macroeconomic shifts, private funds stepped into the void, offering alternative investment vehicles promising attractive yields.

However, unlike publicly traded equities or registered mutual funds, private placements and private funds operate with significantly less transparency, fewer mandatory disclosures, and limited liquidity. The PPMG case highlights how unscrupulous actors can exploit the opaque nature of private real estate funds to mask operational failures, fabricate investment returns, and siphon capital away from unsuspecting victims.

2. Heightened Regulatory Scrutiny on "Senior-Targeted" Fraud

Regulators at both the state and federal levels have made the protection of senior citizens a top enforcement priority. Elderly investors are frequently targeted by fraudsters because they often possess accumulated retirement savings, own homes outright, and exhibit a strong desire for predictable, fixed-income investments to sustain them through retirement.

The involvement of retirees in the PPMG funds almost certainly guaranteed an expedited and aggressive federal response. Financial institutions and private fund managers should expect continued, heightened scrutiny from the SEC and the Department of Justice regarding how they market alternative products to retail and senior demographics.

3. The Illusion of Due Diligence in Private Placements

For financial advisors, wealth managers, and independent investors, the collapse of PPMG underscores the critical necessity of rigorous, independent due diligence. Investors must look beyond slick marketing materials, high-yield promises, and polished executive bios. Verifying asset custody, confirming that loan portfolios actually exist via independent third-party audits, and scrutinizing liquidity terms are vital safeguards against falling victim to Ponzi schemes disguised as conservative real estate investments.

As the legal proceedings unfold in the U.S. District Court for the Northern District of California, court-appointed receivers and federal prosecutors will continue working to trace whatever remaining assets can be salvaged. For the 190 investors who entrusted their life savings to Mark D. Hanf and Hoai-Nam Chu Phan, however, the road to financial recovery will be long, uncertain, and starkly reflective of the devastating human cost of corporate greed and financial fraud.