The SEC has settled a civil enforcement action against defendants who allegedly engaged in a multi-year “Ponzi-like” scheme. They ran a pair of private funds that focused on making and acquiring loans backed by real estate. When the funds became unprofitable, the defendants allegedly continued to make redemption payments and distributions to fund investors out of new capital they raised and from purported loans from affiliated entities, rather than from fund profits. Additionally, one defendant allegedly misappropriated money from those funds for his personal use. The defendants have settled the action, which is pending in the U.S. District Court for the Northern District of California (Court), subject to the Court’s approval. The defendants were also charged in a parallel criminal proceeding brought by the DOJ. This article examines the SEC allegations, the terms of the proposed final judgments against the defendants and the parallel criminal charges. See “SEC’s Latest Enforcement Results and Budget Request Affirm Focus on Fraud” (May 21, 2026).