Beware of Norada Capital: Caveat Emptor My Fellow Small Investors !!!

[David Kanarek]

In 2023, I invested in some Norada Capital Management 7 year Promissory Notes and last week less than one year after signing the last note, I receive a "form" email addressed to "Valued Investor", dated June 20th, 2024 from Marco Santarelli, who signed the letter as CEO & founder, that interest payments were being suspended until further notice without any resumption date. In 2023 before I invested any funds, each and every time that I spoke with their representatives, I asked as my FIRST question if Norada Capital Management had ever missed any interest or principal payments, and was always told the same thing by their representatives, that Norada Capital Management had a perfect payment/reimbursement history.

One week later, after writing their current investors that they are suspending interest payments, they are still seeking new investors for investments but do not inform the new potential investors that they have suspended interest payments. (see attachment)

Before you invest, please feel free to contact me and I will be happy to furnish all of the documentation of this episode, but in the meantime don't trust anything that is not in writing and don't sign any document that allows them to stop paying the interest and/or principal that is owed for any reason.

As I am currently preparing a report for the BBB, the CFPB and the FCC, I would also ask if anyone else has had a similar experience; I feel like David vs. Goliath so please let's work together to see what can be done to have them resume interest payments. And, like me, please leave all the reviews you can on all the web sites you can find about your experience so that other small investors have this information about Marco Santarelli and Norada Capital Management. Thank you.

[David Kanarek]

YOU STILL DONT HAVE ANYTHING TO SAY ABOUT HIS BEHAVIOR !!

This is NOT the way business works. MOST businesses are honest !! MOST don't try to trick their clients! MOST have ethical standards. If you can't even criticize those that are not, it says something about YOU not me....

"Dude"

[Jay Hinrichs]

Quote from @David Kanarek:

YOU STILL DONT HAVE ANYTHING TO SAY ABOUT HIS BEHAVIOR !!

This is NOT the way business works. MOST businesses are honest !! MOST don't try to trick their clients! MOST have ethical standards. If you can't even criticize those that are not, it says something about YOU not me....

"Dude"

I realize your emotional about this we will leave it at that.. hopefully the amount of money you invested wont change your lifestyle as its not appropriate to invest a big % of your funds in such a high risk venture as unsecured Notes.. As we are finding out here on this and other threads.

[David Kanarek]

"Three Strikes and You're Out"

I gave you three chances to demonstrate a moral/ethical clarity publicly and you declined all three times. 

Hope everyone in Nevada who is looking for a real estate broker has taken notice! 

[Jay Hinrichs]

Quote from @David Kanarek:

"Three Strikes and You're Out"

I gave you three chances to demonstrate a moral/ethical clarity publicly and you declined all three times. 

Hope everyone in Nevada who is looking for a real estate broker has taken notice! 

David I have not sold real estate at the street level in oh 20 years.. I just keep my license as I am proud of it..  this is my current project that I own.. www.ivyridgeestatescanby.com 90 homes 700k to 1 mil.  cant pull those off with smoke and mirrors :)   and of course my bank that has loaned me about 60 million to build all this thinks I have morals and character as its the cornerstone concept when lending this kind of money on spec builds.. you dont have it you dont get the money.

[Chris Clothier]

@David Kanarek

I see you just started posting here on the site 2 days ago and so far strictly the posts about Norada notes.  As @Jay Hinrichs noted, you are obviously an investor in the notes and emotional about the uncertainty.  However, you are talking morals and ethics with a gentleman who has successfully done business with perhaps hundreds if not more users on this site and hundreds more who have never heard of BP.  His reputation and credibility are stellar and he is beyond reproach.  His 40-plus years in real estate speaks for itself, and his unquestionable devotion to providing his expertise, advice, and thoughts here on BP have earned him a level of respect on this site that you apparently are unaware of.

He will not condemn anyone simply based off a black and white forum.  He will however be the first to counsel others to avoid anyone found to be unscrupulous after ALL of the facts come out and that usually takes time.  If you read the forums, Jay is on the opposite side of many deals with Norada investors and can personally attest to the successful transactions those investors complete.  He has a historical record with Norada whether he does business directly with them or not.  He is going to be factual while also contemplating what is happening behind the scenes without directly calling anyone out before a final resolution comes out.  

If you spend a few minutes researching Jay, I think you'll find someone you want on your side.  

[David Kanarek]

Thank you for your post. I am confused about what you are talking about. I did not ask him to condemn anybody. As opposed to him commenting on my emotional state. And making legal judgments when he clearly has absolutely NO idea of the facts of the case.

Even so, he did declare that "this is just business"
That is not only ignorant, unethical but simply wrong. It's admirable that you are defending him as he defends unethical and immoral business practices. At the very least he could have stayed silent on the issue, saying he didn't know the facts. But he DID make a judgment and that shows he is not what you think he is. I don't need to be a member for years to see that. Having a moral compass is enough. 

[Chris Clothier]

Best of luck to you -

[Michael Thompson]

https://www.facebook.com/share/p/NPmCS6Urn4irJrXa/?mibextid=...

[Account Closed]

Quote from @David Kanarek:

YOU STILL DONT HAVE ANYTHING TO SAY ABOUT HIS BEHAVIOR !!

This is NOT the way business works. MOST businesses are honest !! MOST don't try to trick their clients! MOST have ethical standards. If you can't even criticize those that are not, it says something about YOU not me....

"Dude"

I have no idea who Norada is, but it could be that it runs Ponzi scheme. I personally would not invest 250K in a company like that. A Note is just a piece of paper. If your Note is secured by any tangible assets you might be able to sue to recover your loss. If their outstanding debt far surpasses what they owe and is not secured, then you may get whatever can be distributed by trustee, if they file for BK. Again, I have no idea who Norada is and this is just a speculation. You should speak with an attorney to see what (if any) options you have to recover your losses. 

[Account Closed]

Quote from @David Kanarek:

Thank you for your post. I am confused about what you are talking about. I did not ask him to condemn anybody. As opposed to him commenting on my emotional state. And making legal judgments when he clearly has absolutely NO idea of the facts of the case.

Even so, he did declare that "this is just business"
That is not only ignorant, unethical but simply wrong. It's admirable that you are defending him as he defends unethical and immoral business practices. At the very least he could have stayed silent on the issue, saying he didn't know the facts. But he DID make a judgment and that shows he is not what you think he is. I don't need to be a member for years to see that. Having a moral compass is enough. 

Jay is not the most evil and malicious guy on BP, he is actually ok. There are few who are much worse, truly toxic and vile characters here. Some are former state prosecutors. They will waste time 24/7 condemning some idiot "wholesaler" who pulls comps from free database and tries to peddle prop for twice its ARV, they will call him a fraudster, criminal, lowlife, Hitler incarnate and etc. But when it comes to sleazy fraudsters and big time criminals who defraud investors of millions of dollars or more and ruin public en masse, they will defend them and say this is just a business, suck it up. That's because they identify with most egregious crooks at the top of our society and believe that it's ok to defraud and steal and do crimes as long as you are a "big shot", it's just not ok for "low lives" to do the same. I wouldn't pay much attention to them, that's just society we live in and it has a lot of dishonest and immoral people with criminal mindsets. What I would do is contact your local attorney and ask what if any remedies you have under the circumstances, and you should not delay it as time in such matters is of essence. It is good that you created this post, it serves public by giving a warning not to deal with Norada. I totally understand your pain, I have seen since my youth how top tier criminals and crooks ruin the lives of decent people. Good luck to you.

[Anil Dham]

@David Kanarek

What advice did your attorney give you when you initially reviewed the offering from Norada?

[David Kanarek]

Quote from @Anil Dham:

@David Kanarek

What advice did your attorney give you when you initially reviewed the offering from Norada?

I am only free to say that I have been advised to turn the matter over to the proper authorities, which I have done and there is more than one agency currently looking at the matter. I am not able to comment further. 

[Chris Seveney]

Quote from @David Kanarek:

Quote from @Anil Dham:

@David Kanarek

What advice did your attorney give you when you initially reviewed the offering from Norada?

I am only free to say that I have been advised to turn the matter over to the proper authorities, which I have done and there is more than one agency currently looking at the matter. I am not able to comment further. 

Personally, I would be shocked if a government agency looked into this. The SEC typically stays away from 506c losses because its accredited investors - they will focus on those that hurt the retail investor. Throw in they are short staffed and if its less than $100M+ it will cost them too much to investigate.

A state agency may look into it, but at this time - someone paused redemptions - that is not a crime even if they are still marketing to investors. I have been a part of companies as a W2 employee that literally one day they walk in and shut it down because the day before their funding dried up, or their was some negative news. 

I am not giving an opinion on whether there was or was not any illegal action involved - but this was clearly a very high-risk investment which people have been talking about for 3-4 years about here on BP. 

[David Kanarek]

I can confirm that you are incorrect on all three fronts but happy that Santarelli has his "people" watching this thread. Please give him my best.

[Don Konipol]

Quote from @Chris Seveney:

@Jay Hinrichs

Actually with a 506c you have very little disclosure - you don’t even need a ppm technically. If it was written by an attorney then everyone had language in there that you could lose your entire investment etc etc.

As you mention big difference between fraud and a bad investment. Right now anyone can speculate but I would always recommend people even when they are upset - to be careful what you say.

Technically, when raising funds under Regulation D or any other SEC exemption, there’s no strict requirement to utilize a Private Placement Memorandum (PPM). However, federal securities laws and SEC regulation require providing investors with accurate information regarding investment risks, details, and fees to prevent fraud.

[David Kanarek]

 👏  

Well said !!! 

Pay attention all you Norada sympathizers !!

[Don Konipol]

New posters often do not understand the purpose, procedures, and people on BP forums.  There is no need to personally attach the intelligence or integrity of anyone who posts something you disagree with or who disagrees with something you post.  Further, there’s no reason to attack someone who points out that you’ve provided no proof of whatever point you’re making.  This doe t mean that the poster is someone in cohorts or a “supporter” of the person, business or methodology you claim defrauded you.

Based on my posts in the other thread on the same topic, I have been receiving emails providing additional information purported to show proof of fraud, though I have NO WAY of verifying it.  So, I will say that until PROOF of fraud is shown, I won’t comment on what MAYBE.  However, I will comment on the investment strategy enacted by the subject. It was just plain STUPID. From what I know of the sponsor’s background, they have NO basis to believe they can successfully navigate the very complicated business of revitalizing a name brand via on line sales only.  Obviously, they, or the co they financed, purchased these brand names that all other major brand companies passed over.  
Apparently investors were made aware of what the investment was, and the “security” behind the “notes”.  If they didn’t understand or realize that what they were investing in was not secured by real property, that’s probably because despite being ACCREDITED they’re NOT SOPHISTICATED.  As @Chris Seveney mentioned in the other thread, the qualifier for accreditation is based on 1981 prices.  $1 million net worth or $200k salary is not “elite” after 43 years of inflationary currency depreciation. 

The fact that this sponsor used investor money to gamble on high yield unsecured notes leaves a bad taste in my mouth.  The fact that the sponsor can unilaterally convert the notes to equity furthers that bad taste.  I hope the investors are able to recover at least some of their investment; but truth be told this has the feel of a total debacle.  Also hoping investors were cognizant of my rule of never investing more than 10% of your investable assets in any one deal, nor more than 20% with any one “sponsor”.  

[Jay Hinrichs]

Quote from @David Kanarek:

 👏  

Well said !!! 

Pay attention all you Norada sympathizers !!

I don't get where you think there are any Norada sympathizers on this thread.. all your getting is feedback from experienced investors who are pointing out reality of the situation and not rushing to judgement before the facts have come out. You have a HUGE bias in this your an investor who is worried about losing your investment ( which could very easily happen). The rest of us have no investment with Norada but do have experience with Raising money  running PPM's and Syndication's and we are all entitled to our opinions on the matter and that's all they are.

@Don Konipol @Chris Seveney to my knowledge are current fund owners/managers and are very versed at the rules.. Myself I have personally done a few PPMs and funds in my career but am not in the day to day like those two aforementioned.

What you have is a few guys that have way over 100 years combined experience with investors and investor deals and we know what it looks like when investors are at very high risk of taking a 100% loss.. And as these threads keep going and things keep coming to light it sure is looking that way. But hopefully Norada can pull it out of the fire.. But I am not holding my breath on it although I sure hope they do for everyone's sake.  Deals like this are NOT GOOD for any of us in the industry it makes it more difficult for us to raise money for projects. I dont think Don or Chris particularly are hurt with this as they have long standing and loyal client bases and it wont affect me personally either but it sure does handicap others wanting to get started who may not have the long successful track record . Bottom line its a stain on the industry and not good at all.. It sucks your in it but Hey as others have pointed out this was super high risk to start with. So its not a shocking event. 

[Joe S.]

Quote from @David Kanarek:

I can confirm that you are incorrect on all three fronts but happy that Santarelli has his "people" watching this thread. Please give him my best.

It helps if you tag who you’re talking to unless it’s obvious that it is the OP you are addressing.

[David Kanarek]

Quote from @Don Konipol:

Quote from @Chris Seveney:

@Jay Hinrichs

" federal securities laws and SEC regulation require providing investors with accurate information regarding investment risks, details, and fees to prevent fraud"

👏 Well said Mr. Konipol!

Pay attention all you Norada sympathizers !!

[Chris Seveney]

Quote from @Don Konipol:

New posters often do not understand the purpose, procedures, and people on BP forums.  There is no need to personally attach the intelligence or integrity of anyone who posts something you disagree with or who disagrees with something you post.  Further, there’s no reason to attack someone who points out that you’ve provided no proof of whatever point you’re making.  This doe t mean that the poster is someone in cohorts or a “supporter” of the person, business or methodology you claim defrauded you.

Based on my posts in the other thread on the same topic, I have been receiving emails providing additional information purported to show proof of fraud, though I have NO WAY of verifying it.  So, I will say that until PROOF of fraud is shown, I won’t comment on what MAYBE.  However, I will comment on the investment strategy enacted by the subject. It was just plain STUPID. From what I know of the sponsor’s background, they have NO basis to believe they can successfully navigate the very complicated business of revitalizing a name brand via on line sales only.  Obviously, they, or the co they financed, purchased these brand names that all other major brand companies passed over.  
Apparently investors were made aware of what the investment was, and the “security” behind the “notes”.  If they didn’t understand or realize that what they were investing in was not secured by real property, that’s probably because despite being ACCREDITED they’re NOT SOPHISTICATED.  As @Chris Seveney mentioned in the other thread, the qualifier for accreditation is based on 1981 prices.  $1 million net worth or $200k salary is not “elite” after 43 years of inflationary currency depreciation. 

The fact that this sponsor used investor money to gamble on high yield unsecured notes leaves a bad taste in my mouth.  The fact that the sponsor can unilaterally convert the notes to equity furthers that bad taste.  I hope the investors are able to recover at least some of their investment; but truth be told this has the feel of a total debacle.  Also hoping investors were cognizant of my rule of never investing more than 10% of your investable assets in any one deal, nor more than 20% with any one “sponsor”.  

I agree. I am not a sympathizer at all - I can tell you that I can count 20+ investors who told me the returns we offer are a joke compared to offerings like this one and others. Too many people chase returns and do not research the offering or risk - for me personally, I think this offering was a very bad investment thesis and am not surprised by the outcome - but I also think STR's and MTR's are dumb as well - so its not a knock on one person or one business model. Just my opinion

It is clear that the original poster is upset - which they should be - but posting in every Norada post on BP that they were lied too without providing a stick of evidence on what they were told or providing what is in the offering docs - people want proof before taking a side - that is all we are saying. Great take it to the courts and let them decide. Once its filed it is public record so we would love to read the lawsuit. 

[David Kanarek]

I agree that it would certainly would be a huge improvement to get the facts before pontificating uninformed ignorant opinions. Or "piling on" investors who are already suffering. Of course, who cares about hurting others as long as it makes one feel important, right? Very disappointed in many our fellow investors but I do defend their right to express their opinions. I am trying to help people who are hurting and their motives would be..........?

[Edward Condon]

@David Kanarek
I'm really sorry you find yourself in this situation.  From what I can see on the other thread, you let Norada toss the coin and say, "You call it. Heads, I win. Tails, you lose."  Had everything gone well, you would have gotten "debt returns".  With things going badly, you get "equity risk".  I can't know from where I sit, but the possibility exists that this is a genuinely crappy, asymmetric, yet legal deal.
This requires us to exercise our right to convert your Note and issue equity (aka membership interests) in Norada. You will recall that your Note allows Norada to convert the outstanding balance owed into equity and that it can redeem that equity in the future by repayment of the Note principal in full.
Thanks for warning others.

[Edward Condon]

@Chris Seveney
@Don Konipol
There are ironies among ironies here.  The SEC wants PPMs to protect investors.  In fact, PPMs protect investment sponsors.  Every PPM says somewhere in it (page 461, in the 4-point type, in the footnote), "What? Are you crazy? This is a high-risk investment! If you make this investment, not only are you going to lose all your money, you're gonna get dandruff, your dog is gonna die and your daughter is gonna run off with some biker dude!"  (I paraphrase.)  My gut says that Norada got "all lawyered up" and promoted an extraordinarily one-sided deal.  (Likely reprehensible, but legal.)  Had Norada limited itself to what was in the PPM, they might be OK, legally.  However, it appears as though the promoter went way beyond the PPM.  I saw an excerpt of an e-mail in which the promoter said, in effect, "This is not a high-risk investment."  He should have said, "Do your diligence. Read the PPM."

[James Hamling]

Quote from @David Kanarek:

YOU STILL DONT HAVE ANYTHING TO SAY ABOUT HIS BEHAVIOR !!

This is NOT the way business works. MOST businesses are honest !! MOST don't try to trick their clients! MOST have ethical standards. If you can't even criticize those that are not, it says something about YOU not me....

"Dude"