California Private Lender Suspected of Defrauding Investors

A private lender is the subject of a criminal investigation by Marin County prosecutors.

The Marin County District Attorney’s Office is investigating Pacific Private Money Incorporated after the Novato-based firm stopped payments to more than 100 investors late last year, the San Francisco Chronicle reported. Deputy District Attorney Sean Kensinger, who heads the county’s Consumer Protection Unit, confirmed the probe but declined to detail the complaints.

Pacific Private Money, founded in 2008 by Tiburon entrepreneur Mark Hanf, specialized in short-term bridge and hard-money loans for owners looking to buy, renovate or refinance properties. The firm allegedly pooled investor capital to fund loans typically carrying interest rates between 8.5 and 12 percent, pitching them as real estate-backed investments offering steady returns.

Many investors in Pacific Private Money could be left high and dry after investing their retirement savings with the company, as more than $100 million of investor money could likely be lost, the outlet reported.

“This was my nest egg to get me through the rest of my life,” said Michelle St. Claire, an artist who invested $500,000 with the firm. “I’m way past retirement age. I’m scared to death. All I can think about is what I’ll do to survive.”

An outside contractor is now overseeing the company and has warned investors that recoveries likely will be “a fraction” of what they invested, the contractor, Bill Brinkman, said in an email to investors on Jan. 23.

Brinkman said the company largely stopped issuing new loans, but one of Private Pacific Money’s funds, Arrival Home Loans LLC, was operating “at a reduced level” as of earlier this year. Pacific Private Money was still issuing new loans with Arrival as a trustee in early January, according to the Chronicle’s review of mortgage records. The firm told investors it shut down all operations in February.

It isn’t the first time Hanf’s real estate track record has come under scrutiny. In 2014, the California Department of Real Estate fined him and temporarily suspended his broker license for illegally commingling placing investors’ money into bank accounts under his control instead of the trust accounts they were meant for. Hanf previously filed for Chapter 7 bankruptcy in 2007.

Hanf did not respond to a Chronicle request for comment. — Chris Malone Méndez