The U.S. Securities and Exchange Commission has opened an investigation into the Sortis Income Fund, a $166 million Portland investment vehicle tied to local favorites like Rudy's Barbershop and Bamboo Sushi, while Oregon's own securities regulator is conducting a separate inquiry into Sortis without publicly specifying whether it targets the fund. The federal probe and state inquiry come as investors have filed a lawsuit accusing fund founder Paul Brenneke and three related Sortis entities of fraud and improper self-dealing loans.
According to The Oregonian/OregonLive, the Oregon Division of Financial Regulation disclosed its own securities investigation involving Sortis in an October denial of a public-records request, without publicly specifying whether the investigation targets the Sortis Income Fund. Division spokesperson Jason Horton called it an open investigation but declined further comment, citing state law, per the same report. The outlet also reported that the state inquiry appears to have begun within the past two years, and that the Oregonian/OregonLive first requested agency documents related to Sortis-affiliated entities back in August 2024 — at which point the division did not claim to hold any investigative records.
Brenneke declined to say whether he participated in an SEC interview or whether Sortis is under investigation, but he said, per the same report, that an alleged regulatory interview alone does not establish wrongdoing or identify the subject of an investigation. He added that he takes confidentiality obligations seriously and would not confirm or elaborate on nonpublic regulatory communications. Brenneke has said neither the fund nor its managers have received a Wells notice or any other formal state or federal charging notice — the kind of notice the SEC typically issues near the conclusion of an investigation when it plans to allege securities-law violations, giving the subject a final chance to argue against charges, the outlet reports.
Investors Reportedly Flagged Concerns to SEC Enforcement
Three people told the Oregonian/OregonLive that Sortis Income Fund investors discussed concerns with the SEC's Division of Enforcement over the past two years, and two sources said the agency sought information specifically about the fund, while one source said SEC officials also asked for information about other Sortis entities. Sources who spoke with the SEC requested anonymity, saying they feared retaliation for speaking with the press, according to the report. The SEC declined to comment, and the outlet notes the agency generally conducts civil investigations privately, per SEC.gov.
Oregon State University accounting professor Terrence Blackburne, who researches the SEC investigative process, said the absence of a Wells notice does not mean much on its own. He noted SEC investigations can compel testimony through subpoenas, that the agency's enforcement manual generally recommends converting matters under inquiry into full investigations or closing them within 60 days, and that investigations average about three and a half years — with the longest one he knows of running more than four decades, the report states.
Lawsuit Alleges Hidden Loans to Brenneke-Linked Businesses
The regulatory scrutiny surfaced alongside a $5 million lawsuit filed by the Stillwater Portfolio in Multnomah County Circuit Court, as reported by Willamette Week. The suit alleges Brenneke's investment company breached contracts with investors and that fund managers used Sortis Income Fund money to finance risky loans to other companies in which Brenneke held an interest, including Rudy's Barbershop and Bamboo Sushi. It further alleges those loans to Rudy's and Sustainable Restaurant Group were not secured by any interest in real estate and were hidden from investors.
Sortis disputes the allegations in full, its attorneys at Barnes & Thornburg said, adding that the company categorically disputes the claims and has filed a request to move the case into private arbitration, which Sortis says its agreements require. Brenneke has said the fund's operating agreement expressly allows loans between affiliated companies without investor notice or consent, and that he took over fund management only after the disputed loans were already issued. A Barnes & Thornburg spokesperson also said neither Brenneke nor Sortis had ever been contacted by the Oregon Division of Financial Regulation about the purported state investigation. The relationship between the Oregon and federal probes and the loans at issue remains unclear, the reporting notes.
A Fund Born in 2016, Now Facing Questions on Two Fronts
The Sortis Income Fund opened in 2016 and is affiliated with investment firm Sortis LLC, promising to use investor money to buy real-estate-backed loans. Fund-raising figures have varied across reporting: a June 2024 OregonLive report said a securities filing showed the fund had raised more than $165 million from 778 investors, while the more recent Willamette Week report cited about $180 million raised from investors since 2016, and separate figures put the fund at $166 million from 775 investors with regulatory assets under management valued at $177 million as of December 2025.
The fund is described as separate from, but related to, Sortis Holdings, the company now known as SoHi Brands. Sortis Holdings invested in Bamboo Sushi and Rudy's Barbershop during the pandemic and later announced an $85 million deal to buy the Ace Hotel Group in 2023, but SoHi Brands went on to experience a cash crunch that led to missed employee paychecks and rent payments, along with corporate staff layoffs, the closure of several retail locations, and a string of lawsuits over past-due bills. The company narrowly avoided a creditor attempt to force it into bankruptcy in 2025.
Earlier Troubles at Sortis-Linked Businesses
The financial strain at Sortis-affiliated businesses has been documented for several years. By summer 2022, local food suppliers said payments from Sortis-owned restaurants started arriving late or not at all, according to OPB. See See Motor Coffee Co. faced an eviction complaint in February 2024 alleging it had not paid rent at its Sandy Boulevard flagship since the prior September, a case first detailed by Willamette Week, and OPB later reported the cafe was locked out of that location in May 2024 for unpaid rent. OPB also reported that a July 2024 lawsuit alleged Sortis absconded with $515,000 in kitchen equipment tied to shuttered Woodsman Tavern locations.
A June 2024 OregonLive report described recent payroll delays, including at Rudy's in May of that year and at See See in April, as an investor and a former executive pressed the company for more information. Sortis later claimed that investors requested tens of millions of dollars in redemptions over a short period after former executive Jef Baker contacted them, and the company said redemption requests increased immediately and substantially after that June 2024 article was published, according to OregonLive's reporting on a subsequent lawsuit.
That lawsuit saw Sortis sue former finance chief Jef Baker in 2024, alleging he violated a separation agreement and attempted to poach investors; Sortis also claimed Baker disparaged the company in comments to the Oregonian/OregonLive. Baker categorically denied the allegations at the time, with his attorney Josh Wolf saying he would file a full response. Baker and Sortis reached a confidential settlement in April 2026, and Multnomah County Judge Judith Matarazzo issued a permanent injunction barring Baker from speaking to media or investors about Sortis.
