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

[Jay Hinrichs]

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

@Jay Hinrichs

It is up to the GP to verify accredited status. Sec has a lot of language about reasonable steps as guidance to be taken.

Most of our accredited come through an investment advisor who verified it. If it is someone “retail” the way many do it is require documentation from them such as a w2, letter from cpa, tax returns or if it’s net worth then backup to provide that confirmation.

Just someone saying they are accredited does not fly.

Ok I guess the ones I saw that were just simple one page question that you attested to did not fly then.. I know the few investments I have made I did have to have my CpA write a letter stating that Ms. Lori and I meet the  criteria.  

You can get investors to sign off on being accredited even if they aren't.

My CPA can send a letter that I own half of Australia's outback mate lol

not so Easy Engelo a for real CPA is just not going to Willy Nilly give you a letter that your accredited they take on liability when they do those things..

[Jay Hinrichs]

Quote from @Jon P.:

Quote from @Jay Hinrichs:

Quote from @Chris Clothier:

Quote from @Chris Seveney:

Quote from @Ian Ippolito:

Quote from @Jon P.:

Keeping this thread back on track about the original topic for those who have invested with Norada and concerned about what to do next, I think it's safe to assume your capital is gone in failed business ventures.  Sorry to be the bearer of bad news, but when you look at the facts of what money was invested in and how it was handled, it leaves little to hope for.

The only potential to get anything back is a potential SEC / FBI investigation to see if any fraud was at play where other assets of Norada is possibly garnished to pay back investors.  I also think the first ones in line with an actual lawsuit will be the the first ones in line for judgements.  That is how it works with judgements.  Literally, first come first serve, assuming you are granted a judgement, of course.  Sitting around waiting and hoping will get you no where.

Also, history seems to repeat itself.  Not sure if anyone is aware of this, but Marco's partner and CFO, Ronald Fossum, was charged with fraud by the SEC fairly recently and barred from participating in any type of similar activity.  Well, here we are again.  I think the SEC would like to know about his participation with Norada and the current situation at hand.  The most concerning piece here is that Norada is still actively raising money from their investors as if nothing is happening!  At first I looked at this as possibly just a failed investment where millions of unaccredited investors lost money (still very bad for everyone involved), but after learning about the involvement of Ronald Fossum that has a convicted history of defrauding investors and the fact that Norada is still raising money from investors, my mind now goes immediately to possible Ponzi Scheme paying past investors current funds being raised.  I can't help but think there is something more malicious here than just a bad investment by looking at the facts.  Time will tell, but for anyone invested with Norada, you are best off filing a complaint with the SEC and seeking legal guidance sooner rather than later.  Sorry to hear so many people got caught up in this mess.  Seems like tens of millions of dollars were raised from unaccredited investors...

Here are some SEC links for a partner and CFO of Norada showing previous fraud history:

https://www.sec.gov/enforcement-litigation/litigation-releas...

https://www.sec.gov/files/litigation/complaints/2017/comp240...

Jon thanks for sharing.

I was trying to find some public documentation that Ronald Folsum is the CFO of Norada (google search) but came up empty.  If he is, it seems to be kept below the radar.

And Norada website itself does not list it's principals (which is...in my opinion...another red flag when deciding whether or not to invest in a sponsor).

Is there some other way to verify his involvement?

 In one of the posts some of their marketing materials (not sure how old it is) had him listed as CFO but also noted he worked as a fractional CFO. He is not listed on the website anymore under:

Team | Norada Capital Management

 Wow! 

Afternoon Chris..  you like me are probably wondering what the heck is going on. However as I read the post from Jon on the latest from Norada It appears the company has the right at anytime unilaterally to convert the notes to equity and stop interest accrual at the point they rolled the notes up to equity..At least from Norada's point of view.

I suspect it was clearly denoted in their offering and Note.. I also suspect the investors simply glossed over that part or never read it or did not understand what it meant. Again supposition on my part.

So really at this point I don't see how note holders can start any kind of claims as they have not lost anything yet.. maybe they can make a claim about this CFO person.. But as for the deal If what Jon Posted is true and that is the terms the investors agreed to then the deal is just on going and other than investors mad as a wet Hornet it sounds like they are in it for an extended period of time and will hope to recoup over the coming years or decades..

One thing is for certain ( at least IMHO) major litigation and or trying to force them to liquidate now would in all likelihood lead to a massive loss of accrued interest and principal.

Massive loss of accrued interest and principal????

Have you seen what the funds were invested in?  The money is already gone in failed business ventures, and really bad ventures for that matter.  There is no positive outcome for anyone here.  People are in a very bad position with Norada and there needs to be some level of accountability for parties involved.

It is quite clear that there is a tremendous amount of things that need to be investigated further to include:

-Improper disclosures and handling of investors capital 

-Conflicting information about accreditation requirements for investors

-Questions around the legality and legitimacy of the actual note documents

-Predatory sales and marketing tactics with false information provided to investors about the investments, returns, etc.

-The fact they are still aggressively raising money with an advertised higher return than before (screams Ponzi & desperation)

-Unlicensed individuals actually selling the investments and receiving commission for it (and other companies referring clients for a fee likely)

-CFO previously convicted of fraudulent activities and banned by SEC from participation with anything related to this type of activity

The list goes on and on.  So regardless whether or not they can actually convert funds to equity taking away all control of people's money, there is still a ton here that needs to be investigated.  Not to mention that equity is worthless in a company that is not worth anything... 

There is no way this doesn't turn into a large lawsuit and investigation based on the seemingly hundreds of people that invested in this. 

Jon, just playing devils advocate here.. And having 50 years in this industry and being around some pretty wild flame outs.. the point I am making is investors can start making all these complaints etc etc.. but if the only hope of recovery ( according to you all money is gone and all assets are worthless) is for this sponsor to be able to keep going and promote their new business model which appears to be paid for Training or Mastermind in the RE field.  

I have a lot of experience with companies like that and the individuals who owned them.. As I was a Vendor/ Lender for students of Armando Montalongo and Nick Vertucci and a lot of Rich Dad Students not a principal in those business justs a vendor.. There is Huge money in the training bizz.. just look at Pace Morby I suspect he has made at least 50 million over the last 4 or 5 years selling his program.. And if this sponsor comes up with something that takes off there is a reasonable expectation that at least some money will come back to these investors.. Also there is a reason Brandon Turner is going into the training bizz even though his ODC company is having struggles with returns not being paid and bringing in pref equity thereby diluting the original investors.. Those investors want Brandon to succeed not shut him down..

As for selling to non accredited to me those folks who said they were and are not I have no sympathy for.. Norada material clearly states you must be accredited.. but greed on the part of the investor has them fibbing about their status.. Then want to Blame the company when it does not go right..

AS for companies selling these investments that were not properly licensed that is a very big problem for those companies.. If complaints are lodged against those unlicensed sales agents and its proven true not sure the penalties but i would not want to be in their shoes. And can investors reasonably feel they will get money out of them.. I highly doubt it..

What is certain though is if the Investors go on the war path and Norada gets shut down they will for sure as you note take a 100% loss and have to lose more money hiring attorneys that will no way work without retainers..

So the investors have to weigh this  IE my money lost and never coming back so I am going to do everything i can to shut Down this company who I feel wronged me.. Or since I have nothing to lose will we allow them to stay operating so we can expect some pay back.. that's the big decision facing these investors. This is what chapter 13 BK allows a work out plan. Or do you do chapter 7 and crater the company.

Anyone / company that is raising capital from investor no matter how perfect thier offerings are if the deals dont go right attornies are going to find a way to pick at them for some sort of issue and try to win judgements etc..

And Even though a guy like Montalongo took a ton of heat he also advised his clients to buy in Vegas and Orlando post crash ( I funded 300 plus deals for those students) and none of my loans were over about 100k each those assets have doubled and tripled just on appreciation but no one mentions that..

[Dewayne C.]

Yes sir I understand that. I just wondered if I had any recourse since they said they only allowed accredited investors but they allowed me knowing I wasn’t certified as one. 

[Dewayne C.]

I told them I had no classifications stating I was an accredited investor and they allowed me to invest anyway knowing I wasn’t. 

[Chris Seveney]

Quote from @Dewayne C.:

Yes sir I understand that. I just wondered if I had any recourse since they said they only allowed accredited investors but they allowed me knowing I wasn’t certified as one. 

 That is a question for an attorney, which they could potentially get in trouble which could be fines from authorities buy my guess is it does not provide you a "get out of trouble pass" as you may have also committed fraud if you executed agreements which were false. 

My question is, typically in a subscription agreement you sign there are representations and warranties by the purchaser. For example in ours it states:

I have either previously furnished the Company a completed and signed Investor Questionnaire or I have completed and signed the attached Investor Questionnaire. All information which I have furnished in this Subscription Agreement and the Investor Questionnaire, concerning myself, my financial position, and my knowledge of financial and business matters is correct, current, and compete.

Then we have a section "Accredited Investor Status" with a checkbox to select your status.

Then we have another section:

Purchaser represents and warrants to the Company as follows:

1. My Statements and responses contained in this Subscription Agreement and the attached Investor Questionnaire are complete and correct and may be relied on by the Company for the purpose of complying with all applicable security laws and to determine whether I am a suitable investor.
2. I will notify the Company immediately of any material change in any statement or response made in this Subscription Agreement or the attached Investor Questionnaire before acceptance by the Company of this subscription.
3. I have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment, or I have consulted with Professional Advisors identified in the attached Investor Questionnaire who have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of prospective investment.
4. I am able to bear the economic risk of an investment in the Shares for an indefinite period of time and understand that an investment in the Shares is illiquid and may result in a complete loss of such investment.

Was that in their agreement and did you sign it?

[Dewayne C.]

No sir. I told them I wasn’t certified as an accredited investor. They knew that, or the agent I deal with did. Nothing in the form ask if I was an accredited investor. 

[James Hamling]

Quote from @Dewayne C.:

Yes sir I understand that. I just wondered if I had any recourse since they said they only allowed accredited investors but they allowed me knowing I wasn’t certified as one. 

Are you following with what your saying here Dewayne? That you knowingly, willingly and wantingly engaged in the venture knowing the rules of who can/cannot participate, knowing your disqualification, disregarded and engaged in it anyways. 

Could they hold liability, sure, but so do you.... 

[Jay Hinrichs]

Quote from @Dewayne C.:

No sir. I told them I wasn’t certified as an accredited investor. They knew that, or the agent I deal with did. Nothing in the form ask if I was an accredited investor. 

however you knew up front that this investment was for accredited only though right ? did the agent tell you to ignore that ?  and this agent was he an employee of Norada or some other company..  I have had RIA wanting to raise capital for us and they can be some pretty lose folks I met with a few and declined to work with them they were just all about makinig fee's for themselves.

[Michael P.]

Quote from @Dewayne C.:

I told them I had no classifications stating I was an accredited investor and they allowed me to invest anyway knowing I wasn’t. 

 So the SEC rules saved non accredited investors from losing money worked as designed. Wait maybe not…

[Dewayne C.]

No sir. I told them I wasn’t and the agent said I could still invest. I never lied. My life has definitely changed over this. My wife’s inheritance gone, my Ira gone, had several other things in my life going on. Just hope my wife and I can handle this. Could be some difficult times ahead. 

[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. 

[James Hamling]

Quote from @Jon P.:

Quote from @Jay Hinrichs:

Quote from @Chris Clothier:

Quote from @Chris Seveney:

Quote from @Ian Ippolito:

Quote from @Jon P.:

Massive loss of accrued interest and principal????

Have you seen what the funds were invested in?  The money is already gone in failed business ventures, and really bad ventures for that matter.  There is no positive outcome for anyone here.  People are in a very bad position with Norada and there needs to be some level of accountability for parties involved.

It is quite clear that there is a tremendous amount of things that need to be investigated further....

Hear me out Jon,
What changed on the above noted items of the venture from time jumped into the "Notes" and now? 

Did they convey "Notes" on 1 venture and than swap into something else? 
From all I see nothing changed. 

Look, you got a fan me in Jon, you do, I am on your side in many ways as I think it was absolute BS garbage from the get-go and arguably a setup for failure. 
But ya-gotta step back and look at the facts, consider whats viable and whats NON-viable arguments. 
I don't see a smoking gun as of yet, I don't. 
Mountains of "WTF" for sure, but most of which pre-existed this conversion, and seems people were a-ok with all the "WTF" until the ax fell with them doing exactly what they were empowered to do from day 1. 

In end, I'd be surprised to see anyone get anything back any year soon, if ever. That's how it all feels to me. I hope I am wrong. I just don't see Radio Shack or the kind being worth a cent ever again, I don't see how. 

[James Hamling]

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. 

Meet with attorneys.... 

That is literally the only "help" anyone can accurately lend now. 

[Basit Siddiqi]

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. 

Keep your head up.
What is done is done and can't be changed. You lvie and you learn and this will be a learning experience.

Expect the worst(that you lost 100% of your investment) but have hope that you will get some of your original investment back.

It will be better on your soul / mind if you tell your family sooner rather than later.
Do some brain-storming prior to the conversation to indicate what you will do to help.
Will you work more hours?
Will your remaining investments allow a comfortable life-style?
etc

You are in my prayers, I hopy you the best.

I just read your profile and it mentions that you have 32 properties. While things look bad, you have a lot of investments remaining which should give you a nice lifestyle(hopefully).

[James Hamling]

Quote from @Dewayne C.:

No sir. I told them I wasn’t and the agent said I could still invest. I never lied. My life has definitely changed over this. My wife’s inheritance gone, my Ira gone, had several other things in my life going on. Just hope my wife and I can handle this. Could be some difficult times ahead. 

Your profile says you own more then 30 investment properties, and are in process of looking to start a REI club in your area.

Forgive me for saying, these statements and details appear to be in conflict. 

Not sure what to make of it. 

[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 

[Jay Hinrichs]

Quote from @Dewayne C.:

No sir. I told them I wasn’t and the agent said I could still invest. I never lied. My life has definitely changed over this. My wife’s inheritance gone, my Ira gone, had several other things in my life going on. Just hope my wife and I can handle this. Could be some difficult times ahead. 

very sorry to hear that.. based on that I would think you will want to do everything you can to support  this company so they can start paying you back.. to go nuclear on them will no doubt cause you a loss.. but you cant control the other folks you could have one investor who has say 50k in it is worth 5 to 10 mill is totally peeved and will do what it takes to shut this down thats your risk.  Also you investment is NOT gone at least not yet.. its been rolled into equity.

[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

[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 

[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. 

[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?

[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. 

[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.

[Dave Hagen]

A couple thoughts on getting back equity.

Using the Norada name with both Capital Management and Real Estate Investments could be used to confuse investors into thinking real estate was part of the assets of the company providing the offered investment. Since they were such different investments, the connection is misleading at best. And if the sales people used it to convince you to buy in, might be considered to be breaking the separation between the corporations.

If money was taken out of Capital Management and put into the Real Estate Investments, that could also be considered a co-mingling of capital. Even if run through other entities, or personal accounts.

Either of these actions could grant access to any equity that the Norada Real Estate Investments has.

I'm not an attorney, but these ideas should be pursued to see if anything applies. They seem to have placed all the outs that they needed to convert this to their benefit, but with most criminals, often slip up in the details, thinking nobody will notice.

Also a reminder to all investors with multiple LLCs, or even a single LLC. Do not mix money and expenses, or it won't protect you from lawsuits as intended.

[Don Konipol]

@Dave Hagen

"Also a reminder to all investors with multiple LLCs, or even a single LLC. Do not mix money and expenses, or it won't protect you from lawsuits as intended.‘

GREAT point!