Investigation Into Pacific Private Money Group
On September 1, 2026, the Securities and Exchange Commission sued Mark D. Hanf and Hoai-Nam Chu Phan, the founder and chief executive of Pacific Private Money Group and the company’s former chief operating officer, in the United States District Court for the Northern District of California. The complaint alleges that from December 2021 through November 2025 they raised more than $80 million from approximately 190 investors, many of them retirees, for two real estate lending funds, and that the returns those investors were promised came largely from new investor money rather than from the funds’ earnings. The complaint also alleges that Hanf misappropriated at least $7 million for himself, spending it on personal mortgage and credit card bills, real estate, cryptocurrency ventures, and a boxing match purse. Both men consented to the entry of judgment without admitting the allegations. The day before, the United States Attorney’s Office for the Northern District of California charged both with conspiracy to commit wire fraud, and charged Hanf with an additional money laundering count. They pleaded not guilty on September 1, and each has a change of plea hearing set for later this month.
If you are one of the roughly 190 people who invested in the Pacific Private Money Fund I or the Pacific Freedom Fund, the enforcement news matters less than the arithmetic underneath it. Thirteen Pacific Private Money entities filed for Chapter 11 protection on June 16, 2026. Against total outstanding investments of nearly $121 million, the recoverable assets of the two funds were estimated in February at less than $17 million.
The bankruptcy is necessary, but it is not the answer
The Chapter 11 cases are pending in the Bankruptcy Court for the Northern District of California, with Pacific Capital Funding Group, Inc. as the lead case, No. 26-30538. Verita is serving as claims agent, and its case website is where proof of claim forms and case documents are posted. Any investor who has not filed a proof of claim should confirm the current bar date with the claims agent and file before it passes. I would not assume that the schedules the debtors filed captured your investment accurately, and I would not assume that someone else is protecting your position.
But I think investors need to be clear-eyed about what the estate is likely to produce for them. Investors in these funds bought membership interests, which makes them equity holders in the entities that are now in bankruptcy. Section 510(b) of the Bankruptcy Code subordinates a claim for damages arising from the purchase of a security of the debtor to the claims of general creditors. In plain terms, a fraud claim against the fund that sold you the interest gets paid, in that fund’s own bankruptcy, only after the ordinary creditors are paid in full. When there is less than fifteen cents of assets for every dollar invested, waiting at the back of that line is not a recovery strategy. It is a formality worth completing while you pursue something else.
The claims worth real money are against parties who are not in bankruptcy
The first question I would ask any investor in these funds is a simple one. How did you hear about it? If a financial advisor, a registered representative, an insurance agent, an accountant, or anyone else holding themselves out as a professional put you into the Pacific Fund or the Freedom Fund, that person and the firm behind them are potential defendants, and they are not in bankruptcy. California’s Corporate Securities Law imposes joint and several liability on broker-dealers and agents who participate in a sale, and Oregon’s securities statute reaches every person who participates or materially aids in a sale, jointly and severally with the seller.
Beyond the selling side, the professionals who serviced these funds are worth examining. Accountants who prepared or reviewed financial statements, fund administrators who produced account statements, the lawyers who drafted the offering memoranda, and the financial institutions that processed the transfers between affiliated entities all had visibility that ordinary investors did not. The SEC complaint alleges that the largest single category of assets the Freedom Fund held was unsecured loans to other Pacific Private Money entities, and that the defendants directed the creation of false account statements and false Schedule K-1 forms. Those allegations raise obvious questions about who else touched those documents. Directors and officers coverage may also be available, and identifying the policies early matters, because coverage of this kind erodes as defense costs are paid.
The criminal case may be the fastest route to a dollar
Under the Mandatory Victims Restitution Act, restitution is not discretionary for wire fraud offenses, and the government is also seeking forfeiture of property traceable to the alleged scheme. Both of those processes depend on the government having an accurate list of victims and documented losses. Investors should make sure the victim witness coordinator at the United States Attorney’s Office has their contact information and their loss documentation, and should sign up for case notifications. This costs nothing and requires no lawyer. It is, however, easy to miss, and someone who is never identified as a victim will not appear in a restitution order.
The SEC’s own judgments leave disgorgement, prejudgment interest, and civil penalties against Hanf, and civil penalties against Phan, to be set by the court later on the Commission’s motion. If money is actually collected, the SEC has authority to distribute it to harmed investors through a fair fund. That is worth watching, though I would not build a plan around it. It is rare for significant restitution to be collected in these sorts of cases.
Two things to be careful about
The first is clawback exposure. In a case the government is describing as Ponzi-like, investors who received distributions exceeding what they put in are potential defendants in avoidance actions brought by the estate. The trustee’s reach under the Bankruptcy Code runs two years, and longer under state fraudulent transfer law. If you took out more than you contributed, I would not treat that money as settled, and I would get advice before spending it or reporting it in a way that assumes it is yours to keep.
The second is signing anything. That includes releases, tolling agreements, settlement offers, and questionnaires circulated in the bankruptcy or by anyone claiming to represent investors. A signature given now to resolve a small piece of this can eliminate a much larger claim later.
The clock is the real problem
Federal securities fraud claims must generally be brought within two years of discovery and in no event more than five years after the violation. California’s limitations period for its securities fraud statute runs two years from discovery or five years from the sale, whichever comes first. Oregon’s runs three years from the sale, or two years from discovery if that is later, which for an investment made in 2022 or earlier may already be a problem. The earliest investments in this scheme date to December 2021, which means the five year outer limits on some of them arrive in a matter of months. Waiting to see how the criminal case resolves, or how the Chapter 11 shakes out, is the most common way investors in these situations lose the claims that were actually worth something.
In the meantime, gather and preserve everything. Subscription agreements, private placement memoranda and any supplements, monthly or quarterly account statements, Schedule K-1s, distribution and wire records, correspondence with anyone at Pacific Private Money or with the person who recommended the investment, and your own notes of meetings. The SEC complaint specifically describes representations made in emails, in person, and in webinars in 2024, so recordings, invitations, and slide decks from those presentations are worth locating too.
One last practical note. Investors in a fraudulent scheme may be able to claim a theft loss deduction, and the Internal Revenue Service has a safe harbor for Ponzi-type losses that avoids some of the usual proof problems. Many investors here also paid tax on income allocated to them on K-1s that reflected earnings the funds did not have. Both of those are worth raising with a CPA now rather than at the filing deadline.
Nothing above is legal advice. The SEC’s allegations were resolved by consent without any admission of wrongdoing, and the criminal charges against Mr. Hanf and Mr. Phan have not been proven. If you invested in the Pacific Private Money funds and want to talk through what your options look like, please don’t hesitate to let me know.