Congressman urges feds to investigate Marin financial lender

A California congressman is calling on federal authorities to launch a thorough investigation into Pacific Private Money, the troubled Novato-based private lender, over allegations of mismanaged investor funds and potential fraud. 

California Rep. Jared Huffman, whose district includes Marin County and much of the North Coast, urged the FBI and Securities and Exchange Commission in a letter sent Wednesday to investigate what he called “financial irregularities and potential fraud” perpetrated by the company. He encouraged the agencies to pursue any legal avenues necessary to recover the remaining assets of dozens of investors who have alleged harm, including both civil and criminal enforcement. 

“I have heard from numerous constituents, most of whom are not wealthy individuals, who had invested their life savings or retirement funds with Pacific Private Money,” Huffman wrote. These small-time investors, he continued, “now face the possibility that their money has been negligently managed, or worse, perpetrated by a fraud.” 

Huffman also requested an investigation into the company’s CEO, Mark Hanf, for “any fraud that may have been committed.” Hanf has a troubled financial history, the Chronicle previously found. In 2007, he filed for Chapter 7 bankruptcy protection, and in 2014, the California Department of Real Estate temporarily suspended his broker license and fined him after discovering he had illegally commingled funds.

Hanf has not responded to repeated efforts by the Chronicle to reach him for comment. 

Whether the agencies have already taken up the issue is unclear. A spokesperson for the SEC declined to comment on the existence of an investigation. The Chronicle has also reached out to the FBI, but has not heard back. 

The letter is the latest fallout in an unfolding saga around the firm, which is now under investigation by at least two separate government entities. In early March, the Chronicle reported that the Marin County District Attorney’s Office had opened an investigation into Pacific Private Money after it suddenly stopped issuing payments to its more than 100 investors last November, alarming them and raising questions about the firm’s financial management.

Last month, California financial regulators also temporarily suspended Pacific Private Money’s lending license. The state’s Department of Financial Protection and Innovation imposed a 30-day freeze on the firm’s activities while the department investigates its financial conditions and probes whether it violated state laws. 

The financial department’s order stated that Pacific Private Money confirmed on March 9 that the company experienced a “severe liquidity crunch” in December, leading it to appoint a restructuring officer that month, who has since been in contact with investors. The department also said that Pacific Private Money missed a three-day deadline to request a hearing on the matter with the agency. 

At least one lawsuit has been filed in Alameda County Superior Court accusing the lender of violating state lending and real estate laws designed to protect borrowers and homeowners.

For the past decade, Pacific Private Money’s business appears to have been centered around bridge and “hard money loans” — specialized, short-term financing options used by real estate investors or homeowners to quickly access capital when traditional loans aren’t practical or out of reach. Hard money loans are typically secured by the property itself and funded by private lenders, making them faster to obtain but with higher interest rates. Bridge loans function similarly, providing temporary funding to “bridge” the gap between purchasing a new property and securing long-term financing or selling an asset.  

Both types of loans can help overcome barriers to entry in competitive markets, such as poor credit or short-term liquidity issues. But they also come with notable risks, such as higher rates, upfront fees and strict repayment schedules, often ranging from six months to two years, and failure to repay them on time can result in foreclosure.