The Securities and Exchange Commission announced it had charged San Francisco Bay Area executives of a private equity fund in what it alleged was a “Ponzi-like scheme.”
The SEC charged the California-based Pacific Private Money Group LLC (PPMG); Mark Hanf, the former CEO of Novato; and Hoai-Nam Chu Phan, COO of a PPMG subsidiary, with offering fraud that raised more than $80 million from an estimated 190 mostly retail investors.
“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,” Jason Lee, Associate Director of the SEC’s San Francisco Regional Office, said. “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.”
According to the SEC, Hanf and Phan misrepresented to investors in two of PPMG’s private funds that investor capital would be used to originate or purchase loans secured by real estate. Between December 2021 and November 2025, the defendants told investors they could expect to receive preferred or fixed rates of return from the funds’ lending activities. However, Hanf and Phan regularly used the new investor capital to make Ponzi-like payment to prior investors, and the returns that Hanf and Phan highlighted were sourced mostly from new investor money, rather than fund earnings connected with their real estate lending business. The SEC further alleges that Hanf misappropriated more than $7 million in investor funds, and used them for his own personal benefit.
The complaint in the U.S. District Court for the Northern District of California, charges Hanf and Phan with violations of the Securities Act and the Securities Exchange Act. Both men consented to an entry of judgement without admitting to any of the allegations. The entry of judgement will permanently enjoin them from “violating the charged provisions of the federal securities laws and from directly or indirectly participating in the issuance, purchase, offer, or sale of any security, except for purchases or sales for their own personal accounts; and order that any disgorgement, prejudgment interest,” the SEC said. The agreement is subject to court approval.
The two men also face criminal charges in connection with the case.