Norada Capital Management suspending payments

[Paula Impala]

I invested in Norada Capital Management and was coming here to connect with others who have invested. Did not receive my payment from Norada this month (June) and just received the following notification in my email.

Any thoughts or recommendations from fellow investors.  Thank you in advance for any advice or insight.

Dear Valued Investor,

I hope you are well. As a lender (aka “Maker”) to Norada, you are a valued member of the Norada family.
The purpose of this correspondence is to provide you with an update on the repayment under the terms of the promissory note (“Note”) as an obligation of Norada Capital Management, LLC (“Norada”).
As with all businesses, Norada is subject to market factors that could impact its ability to make payments. Due to current market conditions and unforeseen financial challenges, we have decided to temporarily suspend distribution payments. This decision was not made lightly and comes after thorough deliberation and analysis of our current financial position.
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. There is nothing required by you related to your Note being converted. It happens automatically upon notice being sent.
As such, this email will provide you notice that Norada has chosen to exercise its right under the Note §6 to issue equity to you in Norada. Your equity is valued at the unpaid face value of the Note plus any accrued but unpaid interest. We expect to be in a position to redeem your interests in short order, and we will keep you posted, as always, on any developments in this regard.

We understand the importance of distributions to our investors and recognize the impact this decision may have on your financial planning. Please be assured that this suspension is temporary. We are committed to resuming regular distributions as soon as our financial situation stabilizes and improves.

Our primary goal is to ensure the long-term stability and sustainability of our business. By temporarily halting distributions, we can preserve capital, manage our resources more effectively, and invest in key areas that will drive future growth and profitability.

In the interim, we are taking strategic steps to strengthen our financial health, including cost-reduction measures, revenue-generating initiatives, and debt restructuring options. Our management team is dedicated to navigating through these challenges and emerging stronger.
We greatly appreciate your understanding and patience during this time. We remain committed to transparency and will keep you informed of any significant developments. If you have any questions or need further clarification, please feel free to contact me directly. (I will do my best to reply to your email in a timely manner.)
Thank you for your continued trust and support.
Sincerely,

Marco SantarelliFounder & CEONorada Capital Management

[Chris Seveney]

@Jon P.

Regarding is this normal about converting to equity - I have seen that in the past. Don does a good job about the 506c

The one thing I will harp on is that people need to understand. A 506c literally can do or say almost whatever they really want.

Questions I have for people who invested:

What document(s) did you sign when you signed up for this offering? That is where the proof will be in the pudding. You had to have signed something or did you just send someone $100k without any receipt? If that’s the case then how do you even know what entity you invested in?

One person who says they were not accredited I believe said they did not sign anything - I find that very suspect.

[Ian Ippolito]

Quote from @Don Konipol:

There are two main types of Reg D 5-6 filings.  Using Reg D 506B the investor merely signs a statement saying that he qualifies as accredited - the sponsor has no need to go any further.  Under Reg D 506C it’s the sponsors responsibility to take reasonable steps to verify that the investor is indeed accredited.  The SEC has accepted the following “proof” provided by the investor (1) copy of last two years tax returns or (2) a letter from the investor’s attorney stating that he knows that the investor is accredited or (3) a letter from the investor’s accountant stating same or (4) a letter from the investors financial advisor stating same or (5) a financial statement with verifiable proof of assets and liabilities. 
If the subject offering was a “B” offering then the sponsor only has to have the borrower sign a statement that he’s accredited.  In a “b” offering no solicitation or advertising is allowed, and there are restrictions to the “preexisting” relationship requirement between sponsor and investor.  In the “c” offering solicitation and advertising is allowed, and no preexisting relationship need exist. 
In any case, it is of course totally improper and most likely in violation of the spirit of the regulation for the sponsor or his representative to suggest that the investor be untruthful in revealing his accredited status. 

I read above what @Dewayne C. said about being a non-accredited investor and still being accepted into a 506c offering.

If this is accurate then in my (non-attorney) opinion, this is a clear "no-no" and a violation of the SEC rules/securities law. And if so, then anyone with direct knowledge has solid grounds for filing a complaint with the SEC (and/or consulting with their attorney).

On top of that he said that he lost his and his wife's retirement money. If accurate then the SEC rules are designed to prevent unsophisticated investors from getting into this exact situation. And many of the SEC final judgments will even point out the outcomes to investors like this, as they explain why they levied huge financials penalties, etc.

[Engelo Rumora]

Quote from @James Hamling:

Quote from @Michael P.:

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Engelo Rumora:

Quote from @Dewayne C.:

Reading all these posts are making it more difficult. If anyone can suggest some help I would greatly appreciate it. If you just want to shame me, well I’ll doing enough of that myself. And once I share this with my family… not sure what will happen. Any help out there please keep me in mind. And in your prayers. 

Sorry to hear mate 🙏

No shame in loosing.

It's how you recover and pick yourself back up.

If you don't, then that's a shame

I have lost more than I can count and so have many others on this forum.

Losses are part of business and life in general.

Our time and energy comes at a price.

The biggest price is the emotional one.

I prefer learning from losses as much as possible and doing my best to not repeat the same mistakes.

Also, not dwelling on it for long and not living in the past to avoid further emotional drag and doubt about moving forward.

Personally, I also don't get involved in lawsuits or collections and consider every loss as my own fault.

Moving forward smarter and more experienced.

Moving forward and doing my best to make more than what I have lost.

I hope that helps and God Bless 

yup 08 to 2011 I lost 10 million in equity.. and had to start over in 2012.. I describe that on my pod cast with bp # 222

I become a ghost at $10m cash mate (Not equity or assets) lol

Won't pick up the phone anymore and laptop is going into the Mediterranean waters hehe 

 You mean Maumee River?

No no no, Engelo is an Aussie, he knows better, The Med is where ya go when have "F-U money" lol. 

Chillaxin in Crete, life in paradise, watch the springboks put a hurtin on the all blacks, a little brai, pop back a few black labels...... Oh yeah, that's the med-life. 

haha

Love it mate

Europe is my playground and I know it very well.

If anyone needs tips on where to go, stay, eat.

Italy especially.

Just ping me a message.

Lived in Milano, Como, Paris, Budapest and travelled all over.

My family is Croatian 

La dolce vita caro mio.

Un cafe per favore

Grazie mille 

[Engelo Rumora]

Quote from @Michael P.:

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Engelo Rumora:

Quote from @Dewayne C.:

Reading all these posts are making it more difficult. If anyone can suggest some help I would greatly appreciate it. If you just want to shame me, well I’ll doing enough of that myself. And once I share this with my family… not sure what will happen. Any help out there please keep me in mind. And in your prayers. 

Sorry to hear mate 🙏

No shame in loosing.

It's how you recover and pick yourself back up.

If you don't, then that's a shame

I have lost more than I can count and so have many others on this forum.

Losses are part of business and life in general.

Our time and energy comes at a price.

The biggest price is the emotional one.

I prefer learning from losses as much as possible and doing my best to not repeat the same mistakes.

Also, not dwelling on it for long and not living in the past to avoid further emotional drag and doubt about moving forward.

Personally, I also don't get involved in lawsuits or collections and consider every loss as my own fault.

Moving forward smarter and more experienced.

Moving forward and doing my best to make more than what I have lost.

I hope that helps and God Bless 

yup 08 to 2011 I lost 10 million in equity.. and had to start over in 2012.. I describe that on my pod cast with bp # 222

I become a ghost at $10m cash mate (Not equity or assets) lol

Won't pick up the phone anymore and laptop is going into the Mediterranean waters hehe 

 You mean Maumee River?

I'm considering dumping contractor's bodies that screw me there haha

[Don Konipol]

Quote from @Ian Ippolito:

Quote from @Don Konipol:

There are two main types of Reg D 5-6 filings.  Using Reg D 506B the investor merely signs a statement saying that he qualifies as accredited - the sponsor has no need to go any further.  Under Reg D 506C it’s the sponsors responsibility to take reasonable steps to verify that the investor is indeed accredited.  The SEC has accepted the following “proof” provided by the investor (1) copy of last two years tax returns or (2) a letter from the investor’s attorney stating that he knows that the investor is accredited or (3) a letter from the investor’s accountant stating same or (4) a letter from the investors financial advisor stating same or (5) a financial statement with verifiable proof of assets and liabilities. 
If the subject offering was a “B” offering then the sponsor only has to have the borrower sign a statement that he’s accredited.  In a “b” offering no solicitation or advertising is allowed, and there are restrictions to the “preexisting” relationship requirement between sponsor and investor.  In the “c” offering solicitation and advertising is allowed, and no preexisting relationship need exist. 
In any case, it is of course totally improper and most likely in violation of the spirit of the regulation for the sponsor or his representative to suggest that the investor be untruthful in revealing his accredited status. 

I read above what @Dewayne C. said about being a non-accredited investor and still being accepted into a 506c offering.

If this is accurate then in my (non-attorney) opinion, this is a clear "no-no" and a violation of the SEC rules/securities law. And if so, then anyone with direct knowledge has solid grounds for filing a complaint with the SEC (and/or consulting with their attorney).

On top of that he said that he lost his and his wife's retirement money. If accurate then the SEC rules are designed to prevent unsophisticated investors from getting into this exact situation. And many of the SEC final judgments will even point out the outcomes to investors like this, as they explain why they levied huge financials penalties, etc.

Hi Ian, how’s it going?  
There are two aspects to being an investor in a Reg D 506c offering who’s unaccredited and did not provide sufficient proof of accreditation (one could possibly obtain needed docs and in this case the sponsor would be the victim  of fraud). But, assuming that an investor was sold units and did NOT provide sufficient proof of accreditation then (1) they can file a complaint with the SEC (which may only indirectly enhance their ability to recover their investment) and / or they can institute a civil suit for recovery of their losses.  Since the sponsor presumably did not comply with the Regulation the sponsor has no reasonable defense, and the investor should receive a judgement entitling the, to recovery of their investment plus interest. However, in any civil judgement, collecting is a different story. 
It’s important to note that IF the sponsor had vetted the investor properly and in accordance with Reg D then the  sponsor would have a statutory defense against a civil lawsuit brought by an investor UNLESS the sponsor committed fraud.  This means that if the sponsor did comply with Reg D and did NOT commit fraud there would be no leagal basis for recovery.  In other words Reg D provides significant protection for sponsors IF they are in compliance with its provisions and requirements and did not commit fraud.  
Somehow I don’t think this investment offering would have passed your syndicated investment “screen”. LOL. 

[Jay Hinrichs]

Quote from @Jon P.:

@Jay Hinrichs not sure there is any coming out of this for Norada Capital Management.  That seems like a completely failed business venture that is beyond saving.  From what I understand, it was lost a while ago, but investors were not given the heads up about concerns on the investments until much later...  Yet they still continued to raise funds for NCM even though it was a losing venture.  My guess is that it's a lost cause with no recovery, and has been that way for a while.  Not sure how you see any situation where investors come out of this in a positive way with any recovery?  It clearly seems like their attention is on their other businesses that are still profitable, and why wouldn't they be?  They have the RE side and they are still raising money from investors for "another business" that is some mastermind or something.  Just seems like they are letting this one go and have the equity conversion clause as a CYA for losing capital in nonsense investments.  I don't like giving anyone false hope and recommending they don't seek legal guidance when they 100% should in this scenario!  And they should speak with government authorities as well.  If wrongdoing is identified, maybe these other profitable businesses Norada is still operating would be forced to pay investors back with those funds/assets.  Why would they?

@Don Konipol shared the most black and white feedback on this whole thread about the accreditation question.  We know this was filed as a 506C (as it's public information) where Don showed us what is required for the sponsor to do.  We can already see from many responses on here that no effort was put into accreditation verification, and possibly even encouraged people to invest after learning they are not accredited.  Certainly not appropriate per the SEC standards Don mentioned.

I'm not super versed in this area, but is this clause to convert investments to equity normal?  Especially without approval from anyone?  I've never heard of anything like that before and I'm not sure how common it is?  To me, it seems like a strong protection clause like this would be used when someone is not confident at all about performance...or worse...plans to fail...???

Time will tell how all this turns out, but I really don't see how there is any positive outcome for money invested in Norada Capital Management when you look at what they invested in and learn more about performance.  They are not going to sink their other businesses to try to bail out NCM, nor can they mix funds.  

Please do not discourage people from seeking legal guidance or reporting to government agencies if they feel anything was handled inappropriately.  That is really doing them a disservice.  They most certainly should seek legal opinions and consult with government agencies.

Jon I am a glass half full guy... most replys on this thread are glass empty Sue the Bastard . Having a lot of experience in the space litigation in these types of scenarios generally speaking is just throwing good money after bad.  Now these of course are just my personal opinions.
Of course the investors are all free to choose whatever path they wish to take.

I just point out the other syndicators that are having problems and the threads on those companies that have been posted on BP..

Like ODC that has a portion of their deals that never really returned anything and were sent letters saying they needed a capital call or were going to take a big fat hair cut.. then ODC decided in the best interest of the company and investors to bring in pref equity according to what has been posted thereby diluting the original investors.. And kicking the can way down the road.. You don't have any of the folks that invested in that scheme immediately jumping to it was a ponzi the guy running it is a crook and so on and so forth.. Same with Ashcroft and even the Lane K  whose syndication already Wiped out 10 million of investor equity..

The facts of this case as I see them.. is the investor invested in a very high return unsecured investment which most investors would have deemed high risk. The fact that anyone would put a majority or their entire retirement funds in one deal regardless of this or another is just not a prudent move as most people would agree..

So just like all the MF syndication's that have been talked about the investors did rally and did work outs to save the owner/company so they can keep working with the hopes of recovery down the road.. Thats really my point with this investment.. It seems that folks were blind to the risk they took and when it does not go right they go on the war path no one was holding a gun to their head and forcing them to invest.. Greed on the investors part does play into this.

There are many investments available to folks as we know and returns are adjusted for risk 95% of the time.. lastly of course these investors have every right to file complaints if they feel they were wronged and based on these threads I believe that has already occurred so anything I post or anyone else is not going to stop the process of complaints that have been lodged.

And again from my personal opinion and being familiar with Norada for a few Decades in the RE sales space. The idea of them being mastermind ponzi artist to me does not ring true. To me it appears they got into something that in hindsight they should not have..
And now how are they going to work out of it.. ????  Or are these investors so upset that they just want a pound of flesh and do not want to give them the chance to work out of it and just punish them . ??

[Jon P.]

@Jay Hinrichs you sound like quite an optimist, which is good in some cases.  I'm sure if you invested money with Norada you may feel differently.  I'm sure you wouldn't have if you were presented with this strange business plan.

I consider myself more of a realist.  If even a fraction of the things discussed on this thread are remotely accurate, then the outlook is not good for Norada or investors.

Based on how things have evolved with the conversion to equity in a seemingly failing business and no communication about how Norada is going to turn this around, it leaves little hope for me to see how any water is left in the glass...

I don't view this a syndication, at least in terms of what most of us are used to in regards to a syndication in a true real estate project that is backed by a physical asset.  This appears to be more of investing in pure speculation of an unproven business model.  It's unfortunate, but I do think there was a high degree of trust people instilled in Norada because they historically invested in real estate, and then went 180 degrees with this strange offering.  I do believe there to be a large degree misrepresentation and miscommunication from how these offerings were presented to people.  Sure, they can have everything on paper done correctly (which I don't think is the case), but the way this was marketed, pitched and sold to people also needs to be handled correctly as well.  We've already seen in the response from @Dewayne C. that the sales people pushed this hard ignoring facts about accreditation, pushing investing from retirement accounts and likely not disclosing necessary information or using high pressure sales tactics, which would also be inappropriate.  I'm curious how much the sales reps got paid for each investment made... 

@Dave Hagen brought up a very good point.  We know the people selling this investment to each investor was the same real estate sales team at Norada.  I don't think these people are licensed to sell real estate or securities, which is an issue by itself, but that could have misled people to believe that the same people selling real estate in the past are selling them on another opportunity involved in RE.  I do think that the cross over involvement could lead to some assets or funds being garnished from the other businesses for investors that lost money in norada capital management because of this.  Of course, time will tell as things play out with SEC investigations, etc.

There are a ton of people that are in a really bad position from this that are posting on BP seeking guidance.  It would be nice to see some actual concrete advice from industry experts on what options people may have if this investment was not handled appropriately (which seems to be the case) vs just shaming people saying "you're stupid for investing in this, live and learn." 

[Jay Hinrichs]

Quote from @Jon P.:

@Jay Hinrichs you sound like quite an optimist, which is good in some cases.  I'm sure if you invested money with Norada you may feel differently.  I'm sure you wouldn't have if you were presented with this strange business plan.

I consider myself more of a realist.  If even a fraction of the things discussed on this thread are remotely accurate, then the outlook is not good for Norada or investors.

Based on how things have evolved with the conversion to equity in a seemingly failing business and no communication about how Norada is going to turn this around, it leaves little hope for me to see how any water is left in the glass...

I don't view this a syndication, at least in terms of what most of us are used to in regards to a syndication in a true real estate project that is backed by a physical asset.  This appears to be more of investing in pure speculation of an unproven business model.  It's unfortunate, but I do think there was a high degree of trust people instilled in Norada because they historically invested in real estate, and then went 180 degrees with this strange offering.  I do believe there to be a large degree misrepresentation and miscommunication from how these offerings were presented to people.  Sure, they can have everything on paper done correctly (which I don't think is the case), but the way this was marketed, pitched and sold to people also needs to be handled correctly as well.  We've already seen in the response from @Dewayne C. that the sales people pushed this hard ignoring facts about accreditation, pushing investing from retirement accounts and likely not disclosing necessary information or using high pressure sales tactics, which would also be inappropriate.  I'm curious how much the sales reps got paid for each investment made... 

@Dave Hagen brought up a very good point.  We know the people selling this investment to each investor was the same real estate sales team at Norada.  I don't think these people are licensed to sell real estate or securities, which is an issue by itself, but that could have misled people to believe that the same people selling real estate in the past are selling them on another opportunity involved in RE.  I do think that the cross over involvement could lead to some assets or funds being garnished from the other businesses for investors that lost money in norada capital management because of this.  Of course, time will tell as things play out with SEC investigations, etc.

There are a ton of people that are in a really bad position from this that are posting on BP seeking guidance.  It would be nice to see some actual concrete advice from industry experts on what options people may have if this investment was not handled appropriately (which seems to be the case) vs just shaming people saying "you're stupid for investing in this, live and learn." 

Jon, your a smart guy what concrete advise is there to give at this point? And I assume you mean concrete advice for folks to get their money back right ?

If U believe the venture has 100% failed and Norada should be put out of business. Then what advice is there to give people.  

At that point there really is only a few.. file complaints with regulators and see if that gets you any funds paid back and or hire a lawyer and make demands and or litigate and enter into some sort of settlement agreement or get a judgement and hope that U can collect on it.

OR dig a little into what the assets are whats left and can any new money be made with them.. the Mastermind business can be quite lucrative I know for a fact.  So maybe as that starts to pay out clients will start to get principal back..  Anyone thinking they should also get interest is just really fooling themselves at this point to get capital back would be the goal at least it would be for me.

[Jay Hinrichs]

Quote from @Jon P.:

@Jay Hinrichs you sound like quite an optimist, which is good in some cases.  I'm sure if you invested money with Norada you may feel differently.  I'm sure you wouldn't have if you were presented with this strange business plan.

I consider myself more of a realist.  If even a fraction of the things discussed on this thread are remotely accurate, then the outlook is not good for Norada or investors.

Based on how things have evolved with the conversion to equity in a seemingly failing business and no communication about how Norada is going to turn this around, it leaves little hope for me to see how any water is left in the glass...

I don't view this a syndication, at least in terms of what most of us are used to in regards to a syndication in a true real estate project that is backed by a physical asset.  This appears to be more of investing in pure speculation of an unproven business model.  It's unfortunate, but I do think there was a high degree of trust people instilled in Norada because they historically invested in real estate, and then went 180 degrees with this strange offering.  I do believe there to be a large degree misrepresentation and miscommunication from how these offerings were presented to people.  Sure, they can have everything on paper done correctly (which I don't think is the case), but the way this was marketed, pitched and sold to people also needs to be handled correctly as well.  We've already seen in the response from @Dewayne C. that the sales people pushed this hard ignoring facts about accreditation, pushing investing from retirement accounts and likely not disclosing necessary information or using high pressure sales tactics, which would also be inappropriate.  I'm curious how much the sales reps got paid for each investment made... 

@Dave Hagen brought up a very good point.  We know the people selling this investment to each investor was the same real estate sales team at Norada.  I don't think these people are licensed to sell real estate or securities, which is an issue by itself, but that could have misled people to believe that the same people selling real estate in the past are selling them on another opportunity involved in RE.  I do think that the cross over involvement could lead to some assets or funds being garnished from the other businesses for investors that lost money in norada capital management because of this.  Of course, time will tell as things play out with SEC investigations, etc.

There are a ton of people that are in a really bad position from this that are posting on BP seeking guidance.  It would be nice to see some actual concrete advice from industry experts on what options people may have if this investment was not handled appropriately (which seems to be the case) vs just shaming people saying "you're stupid for investing in this, live and learn." 

Jon,

PS it appears many of these folks may have enjoyed getting payments for a number of years . If I was them i would be calculating how much you got in payments subtract that from the amount you invested and then see how much that sums to ..  so lets say they put in 50k and have been in it 5 years at 12% they would have gotten 30k back so actual loss is 20k now granted they had to pay tax on the income but they will be able to now off set it with the loss if it comes to that..  As Lenders thats how we work it.. WE look at actually cash loss then offset further loss to offset tax paid on income tax.. now of course we are in the business so other investor may have to spread the loss over a number of years etc.. But at least unlike a failed MF syndication that might have taken cost seg they wont get stuck with recapture.

[Michael P.]

@Michael Lewis

Your book on the 2008 crash was good. Will you write something about Norada?

[Paul Shafer]

Following. As the owner of 2 of these notes, I received the same notice. No longer receiving distributions and realize that "equity" can disappear quickly and altogether. What's more disconcerting than anything is the radio silence now.

[Ian Ippolito]

Quote from @Don Konipol:

Quote from @Ian Ippolito:

Quote from @Don Konipol:

There are two main types of Reg D 5-6 filings.  Using Reg D 506B the investor merely signs a statement saying that he qualifies as accredited - the sponsor has no need to go any further.  Under Reg D 506C it’s the sponsors responsibility to take reasonable steps to verify that the investor is indeed accredited.  The SEC has accepted the following “proof” provided by the investor (1) copy of last two years tax returns or (2) a letter from the investor’s attorney stating that he knows that the investor is accredited or (3) a letter from the investor’s accountant stating same or (4) a letter from the investors financial advisor stating same or (5) a financial statement with verifiable proof of assets and liabilities. 
If the subject offering was a “B” offering then the sponsor only has to have the borrower sign a statement that he’s accredited.  In a “b” offering no solicitation or advertising is allowed, and there are restrictions to the “preexisting” relationship requirement between sponsor and investor.  In the “c” offering solicitation and advertising is allowed, and no preexisting relationship need exist. 
In any case, it is of course totally improper and most likely in violation of the spirit of the regulation for the sponsor or his representative to suggest that the investor be untruthful in revealing his accredited status. 

I read above what @Dewayne C. said about being a non-accredited investor and still being accepted into a 506c offering.

If this is accurate then in my (non-attorney) opinion, this is a clear "no-no" and a violation of the SEC rules/securities law. And if so, then anyone with direct knowledge has solid grounds for filing a complaint with the SEC (and/or consulting with their attorney).

On top of that he said that he lost his and his wife's retirement money. If accurate then the SEC rules are designed to prevent unsophisticated investors from getting into this exact situation. And many of the SEC final judgments will even point out the outcomes to investors like this, as they explain why they levied huge financials penalties, etc.

Hi Ian, how’s it going?  
There are two aspects to being an investor in a Reg D 506c offering who’s unaccredited and did not provide sufficient proof of accreditation (one could possibly obtain needed docs and in this case the sponsor would be the victim  of fraud). But, assuming that an investor was sold units and did NOT provide sufficient proof of accreditation then (1) they can file a complaint with the SEC (which may only indirectly enhance their ability to recover their investment) and / or they can institute a civil suit for recovery of their losses.  Since the sponsor presumably did not comply with the Regulation the sponsor has no reasonable defense, and the investor should receive a judgement entitling the, to recovery of their investment plus interest. However, in any civil judgement, collecting is a different story. 
It’s important to note that IF the sponsor had vetted the investor properly and in accordance with Reg D then the  sponsor would have a statutory defense against a civil lawsuit brought by an investor UNLESS the sponsor committed fraud.  This means that if the sponsor did comply with Reg D and did NOT commit fraud there would be no leagal basis for recovery.  In other words Reg D provides significant protection for sponsors IF they are in compliance with its provisions and requirements and did not commit fraud.  
Somehow I don’t think this investment offering would have passed your syndicated investment “screen”. LOL. 

Thanks Don for all the helpful info.

Yes, this one wouldn't have passed. :)

[Engelo Rumora]

Quote from @Jay Hinrichs:

Quote from @Jon P.:

@Jay Hinrichs you sound like quite an optimist, which is good in some cases.  I'm sure if you invested money with Norada you may feel differently.  I'm sure you wouldn't have if you were presented with this strange business plan.

I consider myself more of a realist.  If even a fraction of the things discussed on this thread are remotely accurate, then the outlook is not good for Norada or investors.

Based on how things have evolved with the conversion to equity in a seemingly failing business and no communication about how Norada is going to turn this around, it leaves little hope for me to see how any water is left in the glass...

I don't view this a syndication, at least in terms of what most of us are used to in regards to a syndication in a true real estate project that is backed by a physical asset.  This appears to be more of investing in pure speculation of an unproven business model.  It's unfortunate, but I do think there was a high degree of trust people instilled in Norada because they historically invested in real estate, and then went 180 degrees with this strange offering.  I do believe there to be a large degree misrepresentation and miscommunication from how these offerings were presented to people.  Sure, they can have everything on paper done correctly (which I don't think is the case), but the way this was marketed, pitched and sold to people also needs to be handled correctly as well.  We've already seen in the response from @Dewayne C. that the sales people pushed this hard ignoring facts about accreditation, pushing investing from retirement accounts and likely not disclosing necessary information or using high pressure sales tactics, which would also be inappropriate.  I'm curious how much the sales reps got paid for each investment made... 

@Dave Hagen brought up a very good point.  We know the people selling this investment to each investor was the same real estate sales team at Norada.  I don't think these people are licensed to sell real estate or securities, which is an issue by itself, but that could have misled people to believe that the same people selling real estate in the past are selling them on another opportunity involved in RE.  I do think that the cross over involvement could lead to some assets or funds being garnished from the other businesses for investors that lost money in norada capital management because of this.  Of course, time will tell as things play out with SEC investigations, etc.

There are a ton of people that are in a really bad position from this that are posting on BP seeking guidance.  It would be nice to see some actual concrete advice from industry experts on what options people may have if this investment was not handled appropriately (which seems to be the case) vs just shaming people saying "you're stupid for investing in this, live and learn." 

Jon, your a smart guy what concrete advise is there to give at this point? And I assume you mean concrete advice for folks to get their money back right ?

If U believe the venture has 100% failed and Norada should be put out of business. Then what advice is there to give people.  

At that point there really is only a few.. file complaints with regulators and see if that gets you any funds paid back and or hire a lawyer and make demands and or litigate and enter into some sort of settlement agreement or get a judgement and hope that U can collect on it.

OR dig a little into what the assets are whats left and can any new money be made with them.. the Mastermind business can be quite lucrative I know for a fact.  So maybe as that starts to pay out clients will start to get principal back..  Anyone thinking they should also get interest is just really fooling themselves at this point to get capital back would be the goal at least it would be for me.

Not sure on the partnership between Norada and Cordle and Eddie Wilson but Eddie is a stud business man and someone that I look up to just like Jay.

They run the masterminds nationwide and it seems pretty legit

[Jon P.]

Agreed on Eddie Wilson, disagree on Andrew Cordle and I know others share my same viewpoint.  Also concerns about CFO charged and banned by SEC previously.  It only takes one bad apple to ruin the bunch.

My recommendation for anyone in this mess is to simply educate yourself as much as possible right now to ultimately make an informed decision on how you proceed.  Yes, that means consulting with counsel and government agencies to get all of their opinions before deciding on what to do.  The more educated we all can be about our money, investments and solutions to challenges like this, the better the outcome.

[Dewayne C.]

Thank you I owe on most of those 32 properties. I do have positive cash flow. But it will take me a good while to get back my wife’s money. I’m 72. Not a lot of time left for me to catch up. 

[Chris Seveney]

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Jon P.:

@Jay Hinrichs you sound like quite an optimist, which is good in some cases.  I'm sure if you invested money with Norada you may feel differently.  I'm sure you wouldn't have if you were presented with this strange business plan.

I consider myself more of a realist.  If even a fraction of the things discussed on this thread are remotely accurate, then the outlook is not good for Norada or investors.

Based on how things have evolved with the conversion to equity in a seemingly failing business and no communication about how Norada is going to turn this around, it leaves little hope for me to see how any water is left in the glass...

I don't view this a syndication, at least in terms of what most of us are used to in regards to a syndication in a true real estate project that is backed by a physical asset.  This appears to be more of investing in pure speculation of an unproven business model.  It's unfortunate, but I do think there was a high degree of trust people instilled in Norada because they historically invested in real estate, and then went 180 degrees with this strange offering.  I do believe there to be a large degree misrepresentation and miscommunication from how these offerings were presented to people.  Sure, they can have everything on paper done correctly (which I don't think is the case), but the way this was marketed, pitched and sold to people also needs to be handled correctly as well.  We've already seen in the response from @Dewayne C. that the sales people pushed this hard ignoring facts about accreditation, pushing investing from retirement accounts and likely not disclosing necessary information or using high pressure sales tactics, which would also be inappropriate.  I'm curious how much the sales reps got paid for each investment made... 

@Dave Hagen brought up a very good point.  We know the people selling this investment to each investor was the same real estate sales team at Norada.  I don't think these people are licensed to sell real estate or securities, which is an issue by itself, but that could have misled people to believe that the same people selling real estate in the past are selling them on another opportunity involved in RE.  I do think that the cross over involvement could lead to some assets or funds being garnished from the other businesses for investors that lost money in norada capital management because of this.  Of course, time will tell as things play out with SEC investigations, etc.

There are a ton of people that are in a really bad position from this that are posting on BP seeking guidance.  It would be nice to see some actual concrete advice from industry experts on what options people may have if this investment was not handled appropriately (which seems to be the case) vs just shaming people saying "you're stupid for investing in this, live and learn." 

Jon, your a smart guy what concrete advise is there to give at this point? And I assume you mean concrete advice for folks to get their money back right ?

If U believe the venture has 100% failed and Norada should be put out of business. Then what advice is there to give people.  

At that point there really is only a few.. file complaints with regulators and see if that gets you any funds paid back and or hire a lawyer and make demands and or litigate and enter into some sort of settlement agreement or get a judgement and hope that U can collect on it.

OR dig a little into what the assets are whats left and can any new money be made with them.. the Mastermind business can be quite lucrative I know for a fact.  So maybe as that starts to pay out clients will start to get principal back..  Anyone thinking they should also get interest is just really fooling themselves at this point to get capital back would be the goal at least it would be for me.

Not sure on the partnership between Norada and Cordle and Eddie Wilson but Eddie is a stud business man and someone that I look up to just like Jay.

They run the masterminds nationwide and it seems pretty legit

 I wonder if Eddie even knows he is on the website. I have seen some people who took a class or "know" someone and have spoken with them and put them on the website as an "advisor"... The CFO thing again, I would bet he was not an employee but a third party consultant he hired to do books for him. It is not uncommon (not saying its ethical) to put people on your website who are really not a part of your company. they make it look like they have this big team but its them flying solo and outsource everything. Not sure what is or is not the case. But as an example, if you look at Andrew Steedman on his website here is his linkedin profile:

He has never worked FOR Norada, he is outsourced. 

(11) Andrew Steedman, MBA | LinkedIn

This is somethign I look closely in and ask when investing. For example that houston MF debacle with applesway if you went on their website and looked up their "asset managers", they were overseas VA's. Personally I do not consider an overseas VA to be an asset manager....

[Dewayne C.]

The agent, Nate told me that even though I was not an accredited investor I could invest. 

[Jay Hinrichs]

Quote from @Dewayne C.:

The agent, Nate told me that even though I was not an accredited investor I could invest. 

Nate worked for who ??? Norada or someone else.. who introduced you to Norada ?

[David Kanarek]

All of you have completely missed the point. Marco Santarelli right up until the day he announced the suspension not only did not mention any financial problems, he bragged on his website, on his YouTube videos and on the literature he provided to anyone who would listen that he was some kind of an expert and NEVER EVER hinted or gave any indication of any problems! In your rush to blame investors and excuse his action, you reveal clearly your transparent moral indifference to his behavior. Why anyone would believe ANYTHING you write is beyond me. To me, you are MORE disgraceful than Norada and Marco Santarelli because you give a clear impression that the fault does not lie only where it clearly should ! Where are you ethics? Your morals? Your sense of right and wrong?

TRULY DISGRACEFUL !!

[Jon P.]

Recent items that are being uncovered:

-Money was continued to be raised right up until the public notice to stop interest payments

-Many people that invested recently either received only 1 or 0 payments prior to notice

-The recent notes changed the venue from WY to TX, and the new TX contract doesn't allow for litigation and forces arbitration, not sure what to think about that, but seemed like it was done in anticipation for this

-Still no transparency or communication from Marco about what is actually happening or plan moving forward

-It appears that norada banking information was immediately changed when the notice was sent out and some of the last interest payments bounced

I share this information to encourage others that have information to also share it so we can all be more educated as no one is receiving any updates or information from norada.  I encourage you to speak up.  You don't have to pay attention to comments on this thread that bother you, but you should speak up and share information so we can all be more educated.  There are some very good points on this thread from many people that I've learned from.

I believe @Dewayne C. is referring to Nate Hall.  I am familiar with Michael Johnson.  Both are real estate advisors that sold real estate, but also sold these investments.

[Jay Hinrichs]

Quote from @Jon P.:

Recent items that are being uncovered:

-Money was continued to be raised right up until the public notice to stop interest payments

-Many people that invested recently either received only 1 or 0 payments prior to notice

-The recent notes changed the venue from WY to TX, and the new TX contract doesn't allow for litigation and forces arbitration, not sure what to think about that, but seemed like it was done in anticipation for this

-Still no transparency or communication from Marco about what is actually happening or plan moving forward

-It appears that norada banking information was immediately changed when the notice was sent out and some of the last interest payments bounced

I share this information to encourage others that have information to also share it so we can all be more educated as no one is receiving any updates or information from norada.  I encourage you to speak up.  You don't have to pay attention to comments on this thread that bother you, but you should speak up and share information so we can all be more educated.  There are some very good points on this thread from many people that I've learned from.

I believe @Dewayne C. is referring to Nate Hall.  I am familiar with Michael Johnson.  Both are real estate advisors that sold real estate, but also sold these investments.

Was just running some math tonight to put this all in context .. from what has been talked about 100 million was raised from all these folks.. I don't know if that's accurate or not..
So lets say the average note interest rate was 15%  ..So currently or at last month if that was how much was raised then they have a burn rate of 1.2 million per month and if the investments are not cash flowing big time one can see how they would run out of money very quick or have to save what they have to try to reorg..

Now we have to keep in mind there is always two sides to these deals and folks are innocent until concrete facts come out and they are proved guilty .. I know David K wants to think any of us that do not take his position based on his post thinks we lack Morals and Character.  The idea for these threads is to talk about these deals from all angles and not take this personally.. Although I can see how David K who is an investor is very upset .. And i understand his position IE This deal had to be a scam from Day one in his mind.. And it could come to pass that is what happened especially with the notes with such high interest and the investments such high risk.

At this point the investors just want their money back hopefully they understand return of principal would be a huge win.. But if the money is Truly gone and there are not real assets then how are the investor going to get paid.. Do you all that invested think Marco is sitting on all your money like 100mil or 200 mil in a bank account ??? .

End of the day If Marco is put out of business then that would mean a chapter 7 not even a chapter 13. Secured investors get first dibs unsecured are next in line and that usually mean pennies on the dollar.. I have been there done that.  So what help can be given to you folks at this time.. what do you expect on BP.. ?  If and I am sure its already happened  but if complaints are lodged with the regulators then once they look at the transactions they make a decision of what to do from there end..  Private investors hiring lawyers ( which I am sure has already been done)  can sue.. Even though the doc says you cant .. you still can.. And try to wrangle a settlement or a judgement.. I mean really thats all I know on course of action unless someone has other ideas ?

[Henry Clark]

Dropped off at about page 5 a few days ago.  Don’t want to read thru the rest.  Could one of you that actually invested in this product clarify the following. 

1.  The original investment was a bond?

2.  The underlying assets were not real estate or anything even associated with BP?

3.   The underlying assets were Broadway plays, crypto, masterminds, defunct brand names, etc??

4. Expected return was 15%?  I plugged that.  You put in the correct expected return.

5. A concern is whether your an accredited investor or not?

I’ll get to the legal, ethical, or business logic after the above is clarified and or expanded by an actual investor.  Thanks.

[Jon P.]

[Arijit De]

There seem to be a facebook group which has members who invested in Norada Capital Promissory note and got the same notice of equity conversion. A lot of people are agitated with the recent email of FAQs which seem to not explain anything and also highlight that we as investors have no rights. Including the group so folks here can take a look and help with collective step if needed. https://www.facebook.com/groups/1161232915077076

[Jay Hinrichs]

Quote from @Henry Clark:

Dropped off at about page 5 a few days ago.  Don’t want to read thru the rest.  Could one of you that actually invested in this product clarify the following. 

1.  The original investment was a bond?

2.  The underlying assets were not real estate or anything even associated with BP?

3.   The underlying assets were Broadway plays, crypto, masterminds, defunct brand names, etc??

4. Expected return was 15%?  I plugged that.  You put in the correct expected return.

5. A concern is whether your an accredited investor or not?

I’ll get to the legal, ethical, or business logic after the above is clarified and or expanded by an actual investor.  Thanks.

Morning Henry,

Investment was an unsecrured prom note issued by one of Norada's companies.

the purported companies that were invested in were not real estate related or BP related

your point 3 is correct.

Notes were written at 12 to 17% interest only with payments due monthly and terms up to 7 years i believe.

yes there are those who posted who said they were not Accredited investors and they let the sales agents for Norada know that but were encouraged to invest anyway.

That sums it up from what I have seen posted.. In addition this fire storm started when payments stopped or payments were returned to the bank NSF. And then a Memo went out to the investors stating the Prom note they invested in gives Norada the right to cancel it and move the investors into an Equity position in the Company pro rata to their dollar amount invested.