Key Takeaways
- • The U.S. Securities and Exchange Commission has opened an investigation into the $166 million Sortis Income Fund, an affiliate of Portland-based Sortis LLC, according to The Oregonian/OregonLive.
- • Oregon's Division of Financial Regulation is also conducting a securities investigation, though the specific Sortis entity under review has not been identified and the agency declined further comment.
- • Investors have alleged the fund made risky loans to Sortis-owned consumer brands, including Bamboo Sushi and Rudy's Barbershop, a claim the firm categorically disputes.
- • The fund's regulatory assets under management were valued at $177 million as of December 2025, against $166 million raised from 775 investors per early 2025 filings.
- • Sortis Holdings, now SoHi Brands, previously faced a cash crunch, a failed $85 million Ace hotel group acquisition in 2023, and a near-bankruptcy attempt by creditors in 2025.
Summary
Federal and state financial regulators are probing the Sortis Income Fund, a Portland-based real estate fund that some investors have accused of making risky loans to popular Northwest restaurants and barbershops. According to The Oregonian/OregonLive, the U.S. Securities and Exchange Commission opened an investigation into the $166 million fund, which is affiliated with the investment firm Sortis LLC. The Oregon Division of Financial Regulation separately disclosed an open securities investigation in an October denial of a public records request, though it is not clear which entity among Sortis's many related companies is the target, or whether the state and federal probes are related to the loans.
The top Sortis executive, Paul Brenneke, was reportedly interviewed by the SEC in Washington, D.C., earlier this year, according to a person informed about the meeting. Brenneke declined to confirm whether he participated or whether his company is under investigation. In a statement from his attorneys, he said an alleged regulatory interview "standing alone, does not establish wrongdoing." Brenneke also said neither the fund nor its managers had received a Wells Notice or any other formal charging notice. An Oregon State University accounting professor who studies SEC processes noted that the absence of a Wells Notice "doesn't mean that much," and that SEC investigations have averaged roughly three and a half years in his FOIA-based database. A spokesperson for Barnes & Thornburg said Brenneke and Sortis have never been contacted by the Oregon regulator about the purported investigation.
The Sortis Income Fund, opened in 2016 to buy real-estate-backed loans, is separate from but related to Sortis Holdings, which invested in consumer brands including Bamboo Sushi and Rudy's Barbershop during the pandemic. Sortis Holdings, now called SoHi Brands, experienced a cash crunch that led to missed employee paychecks and rent payments, and a failed $85 million deal announced in 2023 to buy the Ace hotel group marked a turning point. The company laid off corporate staff and faced numerous lawsuits, and narrowly avoided an attempt by creditors to force it into bankruptcy last year.
A Texas investor, Stillwater Portfolio, filed a complaint in Multnomah County Circuit Court alleging the fund made "risky loans to Sortis-owned businesses" and that managers concealed this from investors, as first reported by Willamette Week. Sortis has moved to send the case to private arbitration. Brenneke said the fund's operating agreement allows loans between affiliated companies without investor notice or consent, and that he took over management after the loans were issued. Securities filings from early 2025 reported the fund raised $166 million from 775 investors, with regulatory assets under management of $177 million as of December 2025. Three people told the newsroom that investors have raised concerns with the SEC's Division of Enforcement over the past two years, and the sources showed timestamped emails from an SEC enforcement lawyer. The SEC declined to comment.
The top Sortis executive, Paul Brenneke, was reportedly interviewed by the SEC in Washington, D.C., earlier this year, according to a person informed about the meeting. Brenneke declined to confirm whether he participated or whether his company is under investigation. In a statement from his attorneys, he said an alleged regulatory interview "standing alone, does not establish wrongdoing." Brenneke also said neither the fund nor its managers had received a Wells Notice or any other formal charging notice. An Oregon State University accounting professor who studies SEC processes noted that the absence of a Wells Notice "doesn't mean that much," and that SEC investigations have averaged roughly three and a half years in his FOIA-based database. A spokesperson for Barnes & Thornburg said Brenneke and Sortis have never been contacted by the Oregon regulator about the purported investigation.
The Sortis Income Fund, opened in 2016 to buy real-estate-backed loans, is separate from but related to Sortis Holdings, which invested in consumer brands including Bamboo Sushi and Rudy's Barbershop during the pandemic. Sortis Holdings, now called SoHi Brands, experienced a cash crunch that led to missed employee paychecks and rent payments, and a failed $85 million deal announced in 2023 to buy the Ace hotel group marked a turning point. The company laid off corporate staff and faced numerous lawsuits, and narrowly avoided an attempt by creditors to force it into bankruptcy last year.
A Texas investor, Stillwater Portfolio, filed a complaint in Multnomah County Circuit Court alleging the fund made "risky loans to Sortis-owned businesses" and that managers concealed this from investors, as first reported by Willamette Week. Sortis has moved to send the case to private arbitration. Brenneke said the fund's operating agreement allows loans between affiliated companies without investor notice or consent, and that he took over management after the loans were issued. Securities filings from early 2025 reported the fund raised $166 million from 775 investors, with regulatory assets under management of $177 million as of December 2025. Three people told the newsroom that investors have raised concerns with the SEC's Division of Enforcement over the past two years, and the sources showed timestamped emails from an SEC enforcement lawyer. The SEC declined to comment.
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