SEC Ponzi Scheme Charges Reveal $121M Fraud, Only $17M Recoverable

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Legal

Federal regulators say two former executives at a Bay Area private lending firm ran a Ponzi-like operation that drained the retirement savings of hundreds of everyday investors. The SEC Ponzi scheme charges filed this week accuse Mark D. Hanf and Hoai-Nam Chu Phan of misleading approximately 190 mostly retail investors into pouring more than $80 million into real estate funds that, prosecutors say, never generated the returns they promised.

Key takeaways

The SEC charged Mark D. Hanf, former CEO of Pacific Private Money Group LLC, and Hoai-Nam Chu Phan, former COO of a PPMG subsidiary, with securities fraud.
Roughly 190 mostly retail investors, many retired senior citizens, put in over $80 million between December 2021 and November 2025.
New investor cash allegedly funded payouts to earlier investors, while Hanf is accused of personally misappropriating more than $7 million.
Total outstanding investments reached nearly $121 million, but recoverable assets by February 2026 were estimated at under $17 million.
Both men consented to judgments barring future securities violations, and the U.S. Attorney’s Office for the Northern District of California filed parallel criminal charges.

SEC Charges Over $80 Million Ponzi-Like Scheme in California

The Securities and Exchange Commission announced on September 1, 2026, that it had filed a civil complaint against Hanf and Phan in the U.S. District Court for the Northern District of California, accusing them of orchestrating an offering fraud tied to Pacific Private Money Group LLC, a Novato, California-based firm. This is one of the more striking SEC enforcement California actions of the year, given the size of the losses and the age of the victims involved.

Fraudulent Fundraising from Approximately 190 Mostly Retail Investors

According to the SEC’s complaint, the scheme unfolded from roughly December 2021 through November 2025. During that window, Hanf and Phan — the latter also known as Nam Phan — raised money from about 190 investors, the vast majority of them retail buyers rather than institutions. A significant share, the SEC says, were retired senior citizens who had entrusted their savings to what looked like a straightforward real estate lending vehicle.

Misrepresentation of Fund Use and Ponzi-Like Payment Structure

Investors were told their capital would go toward originating or purchasing loans secured by real estate, with the promise of preferred or fixed returns tied to that lending business. That’s not what happened, regulators allege. Instead, Hanf and Phan routinely funneled new investor money to pay off earlier investors — a hallmark of a Ponzi-like scheme — rather than distributing genuine profits from the funds’ lending activity. This is the same playbook regulators have seen dismantle other private funds: promised yields that were never backed by real earnings, sustained only by a constant stream of fresh capital.

Financial Misappropriation and Scheme Unraveling

Beyond the alleged Ponzi structure, the SEC says Hanf personally diverted investor money for his own benefit — a detail that adds a straightforward theft allegation on top of the broader fraud claims tied to the Pacific Private Money fraud case.

More Than $7 Million Misappropriated for Personal Use

The complaint alleges Hanf misappropriated more than $7 million of investor funds for personal use, money that regulators say never touched the real estate lending business investors believed they were funding.

Scheme Collapse Triggered by Investor Withdrawal Demands in Fall 2025

The operation began to fall apart in the fall of 2025, when a wave of investors asked to pull their money out. Jason Lee, Associate Director of the SEC’s San Francisco Regional Office, put it plainly: “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.”

That’s the moment that exposes almost every Ponzi-style structure — the math only works as long as new deposits outpace withdrawal requests. Once redemptions spike, the whole arrangement collapses under its own weight.

Massive Investor Losses with Limited Recoverable Assets

The scale of the shortfall is stark. Lee noted that “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.” He added that this “amounts to devastating losses for so many investors.” In other words, investors are staring at recovering, at best, a small fraction of what they put in — a gap of more than $100 million between what was invested and what’s actually left.

Legal Actions and Enforcement Outcomes

The SEC’s civil case and a parallel criminal case now run side by side, signaling how seriously authorities are treating this real estate investment scam involving a firm that once presented itself as a reliable private lender.

SEC Charges for Violations of Securities Act and Exchange Act Provisions

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, along with Rule 10b-5. Phan faces charges under Sections 17(a)(1) and (3) of the Securities Act, plus the same Exchange Act and Rule 10b-5 provisions. These are the standard anti-fraud tools the SEC reaches for in offering-fraud cases, and their use here underscores the agency’s view that this was deliberate misrepresentation, not mismanagement.

Consent Judgments and Pending Penalty Determinations

Without admitting to the allegations, both Hanf and Phan agreed to judgments, subject to court approval, that would permanently bar them from violating federal securities laws and from participating in the issuance, purchase, offer, or sale of any security — except for transactions involving their own personal accounts. Disgorgement, prejudgment interest, and civil penalties against Hanf, along with civil penalties against Phan, will be determined by the court later, following a motion from the Commission.

Parallel Criminal Charges Filed by U.S. Attorney’s Office

In a coordinated move, the U.S. Attorney’s Office for the Northern District of California announced criminal charges against both men. Running civil and criminal cases in parallel is common in large-scale fraud matters, since it lets regulators pursue financial remedies and injunctions while prosecutors pursue potential prison time.

Why This Case Matters for Private Fund Investors

This enforcement action lands at a moment when private real estate funds have drawn growing retail interest, partly because they promise steadier, fixed-looking returns compared with volatile public markets. That’s exactly the pitch investors say they were sold here — and exactly what regulators allege turned out to be false. For retirees and other retail investors weighing similar private placements, the case is a reminder that fixed or preferred return promises in unregistered funds carry risks that aren’t always visible until withdrawal requests pile up and the money simply isn’t there.

It’s also a signal to the broader private-fund industry that regulators are watching how capital flows between investor cohorts inside these vehicles, particularly when new money appears to be propping up payouts owed to earlier backers rather than being deployed into the assets a fund claims to hold.