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

[Michael Thompson]

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

[Michael Thompson]

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

[Dean Ng]

Quote from @Edward Condon:

@Don Konipol
If the S&P 500 is down 3.50% for the month and the fund manager reports a 0.80% gain, either he is not invested in the US equity market, or he is lying.  

This is untrue.  It's possible with derivatives and hedges to reduce losses and volatility.  I've invested in the stock market for decades and when the SP500 was down 38% in 2008, I was up 2%.  When it collapsed 34% during Covid, I was down  only 6%.  All with the help of derivative contracts.  This is how many hedge funds operate, and it by itself isn't a sign of fraud or deceit.  There are numerous ways to make a stock portfolio less correlated to the stock market.

[Michael Fish]

Quote from @Paul Azad:

Quote from @V.G Jason:

This was so obvious with their note offerings at such yields. People just keep getting tricked by the high number, go for a realistic one and be happy. 

Hope the best for the investors. 

I don't know that their yields are that high, per se. They offer 12/15/16.7% on 3,4,5,6 or 7 year term promissory notes backed by no collateral, for investments of 50/100/200k levels, which at first sounds good but they appear to be making the loans possibly to a single non investment grade company "Retail Ecommerce Ventures was founded by Alex Mehr and Tai Lopez last year."
from www.pennlive.com article , Published: Dec. 07, 2020, 9:52 p.m.

"The company that owns the intellectual property of Radio Shack, DressBarn, Linens ‘N Things, Modell’s Sporting Goods and Pier 1 Imports has purchased the intellectual property of Stein Mart Inc.

Retail Ecommerce Ventures’ subsidiary, Stein Mart Online Inc. submitted the winning bid of $6.02 million at the November 18 court auction. The winning bid was approved on November 23 by the U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division. The subsidiary acquired the Stein Mart nameplate as well as its private label brands, domain names, social media assets, and customer data."

Most of their loan companies went bankrupt years ago, have zero physical assets, other than the trademarks which were bought and now are trying to have an online store presence, no physical real estate. As such this company, Retail Ecommerce Ventures, can't likely get an 8.5% prime rate loan from a bank or even the usual 17-22% loans from the BDCs that loan to this small/middle market space (read BDC 10qs financial reports for their prevailing loan rates), so they go to Norada, which gets cash from promissory notes, loans out at likely higher than the BDC rates then pays the difference 12-15% to note investors etc. who if smart is also leveraging up their loan book to REVentures to juice their profits even more. All the BDCs - business development companies do leverage as well, but they hold first lien positions over the assets of the businesses they loan to as well as equity positions for more safety.  Why would Norada hold distributions? Non-performing loans, probably. 
Marco explains their business in these BP Posts below: where he seems to contradict himself, saying In the post that the notes "ARE backed by hard assets and collateral." but on website says they are not. Also says in post that the notes are not higher risk just because yield is higher. That is prima facie Absurd, as the definition of risk is the interest rate that merits a certain Risk, ie directly proportional. 



Marco Santarelli

• Specialist
• Orange County, CA

Replied 3 years ago

@Chris Yeung @Julian Buick @Steve Morris

Good morning gentleman.

Just to provide clarity in this post, there are three (3) separate companies:

1) Norada Real Estate Investments

2) Norada Real Estate Funding

3) Norada Capital Management

The Promissory Notes you're referring to belong to Norada Capital Management. These are not specifically real estate related. They are business notes backed by our portfolio of 10+ businesses which does include some real estate.

The note returns range based on investment but is double-digit. There are also bonus rates for larger investments. Interest payments are paid monthly, and Note lengths are currently 2- or 3-year terms.

Note that you must be an accredited investor as defined by the SEC.

Please let me know if you have any questions.

Continued success!

• Norada Real Estate Investments
• https://www.NoradaRealEstate.com

Marco Santarelli

• Specialist
• Orange County, CA

Replied a year ago

Quote from @Michael Fish:

I, too, am interested in investing with their promissory note option. However, it seems extremely high risk as, to my knowledge, it is unsecured and only backed by a 'promise' to repay not any hard assets or relevant collateral.

Hi Michael,

Just to quickly address your comment here... The Norada Capital promissory notes do offer a high rate of return (interest), but I would not classify them as "high risk" because of the higher interest rates.

To correct your comment, they ARE backed by hard assets and collateral. Our fund includes a portfolio of over 15 companies that form the foundation behind the Notes. You can find more information on the website at or you can contact one of the Investment Counselors for more detailed information.

Continued success,

Marco Santarelli
Norada Capital Management
Norada Real Estate Investments
(800) 611-3060
NoradaCapital.com
NoradaRealEstate.com
Subscribe to our Podcast

Your Premier Source for Turnkey Cash-Flow Investment Property

We are proud to be a two-time Inc. 5000 listed company.

• Norada Real Estate Investments
• https://www.NoradaRealEstate.com

from their website:

WHAT FEES DO YOU CHARGE?

Norada Capital Management does not charge management or servicing fees of any kind. It earns a profit from the business loans it originates to approved businesses and real estate opportunities.

WHAT IS AN “UNSECURED” NOTE?

“Unsecured” means that, for making a loan to Norada Capital Management as set forth in the Promissory Note, the Investor does not receive any collateral in any of the company’s properties or other assets. The Investor simply receives the company’s written, legally enforceable promise to repay the Investor, and pay the Investor interest 

Hopefully, there are not too many Norada loans in non-accrual state, but yields of 12-16.7% have to generate much more than that in order to account for the defaults and thus Risk level seems quite high. 

 Yes, as I mentioned more than a year ago, it seemed high risk then due to the lack of collateral and a few other points I did not receive satisfactory answers about. I would still consider it very high risk even today. 

i am sorry to hear the situation may be heading south as it seems they are, or have, suspending distributions.  

Wish the best for recovery of funds for anyone invested. 

[Ian Ippolito]

Quote from @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

I'm sorry to hear that.

Every investor has a different risk tolerance, comes from a different financial situation and has different financial goals. So an investment that looks fantastic to one will look terrible to another and vice versa.

If I remember correctly, Norada was projecting sky-high interest returns of 10-20% (personal red-flag #1), were unsecured notes (personal red-flag #2) ...and worse somewhat obsfucated by the marketing (MAJOR personal red-flag #3). Their deck was too sparse and missing key info for judging risk (which I find is often associated with offerings that target less sophisticated investors...and was personal red-flag #4). Also they had ludicrous claims like calling the returns "predictable income" (impossible in any investment which always has risk...and personal red-flag #5). So to me, Norada was an easy "no" for many reasons.

On the "paying distributions reliably" and then stopped: I'm sorry to hear this. If an investment goes bad (which can happen to both good and bad sponsors)you should expect distributions to go down or stop. This doesn't mean that fraud occurred.

Now, where you have a potentially valid fraud complaint is if Norada continued to market to new investors without revealing this material information to them. If that's the case then you probably do have something to report to the SEC. But you will also need to make sure they didn't later reveal this to those new investors (for example prior to them signing).

[Terra Padgett]

Quote from @Chris Seveney:

Quote from @Don Konipol:

Quote from @Chris Seveney:

@Don Konipol

100% agree

Who knows how this pans out but if you go to

https://noradacapital.com it says current holdings and those include radio shack, pier 1, linens and things etc.

So without seeing any paperwork you were investing in essentially an accredited mutual fund from someone who says they were a real estate guy

For me - if I put myself in those shoes as a real estate guy trying to run a fund of private or public companies all not real estate related- I have ZERO experience in that. What was the sponsors ?

Right Chris

you’d think people would research the HOW to invest before investing their “life” savings. 
If someone is worth $10 million and wants to take a $50k or $100k “flyer’ without thorough investigation, that’s okay.  But placing a significant amount of your capital with some stooges without a clue as to what they’re doing is flushing money down the toilet.  And if you invest but have no idea either WHAT your investment is or HOW it is secured or IF it is a debt investment, equity investment, or hybrid of the two is a sure fire way to get burned.  What’s worse is many investors who do get burned become afraid of investments in general and keep their money “safe” at bank rates of return.  

In my mind this all goes back to RISK.  unless or until an investor understands and can somehow quantify risk in each investment they’re considering they can not make a proper investment decision.  It’s like asking whether you should invest in an investment that has an expected return of 20% or an investment with an expected return of 10%.  If you can’t quantify risk and don’t understand the mechanics of “weighted” average of expected return and range of returns (standard deviation) then you are at a severe disadvantage and should consider a competent investment / financial manager for your investment capital.  

Btw, I’ve seen people with a great deal of success in ACTIVE REAL ESTATE BUSINESS lose large sums in passive investment for just these reasons.  Running a real estate business, active investing in real estate, and passive investing in real estate are three related but DIFFERENT categories.  And investing in “other” than real estate is even more different.  It’s like you and I leveraging our success in notes/lending to raise $100 million to invest in art.  And investors thinking they’ve done their “due diligence” because they checked our track record in note investing.  

 This is why the numbers for an accredited investor should be changed. The $200k is from like 1982..... Back in 1982 a net worth of $1M or $200k a year was ALOT. One report said by 2027 it will be over 30% of population.

The issue with it is if you make $200k a year - $50k for an initial investment could be your life savings,  most people I know who make $200k do not even have $50k saved. As you have mentioned in the past, you should not put more than 10-15% of your money in one investment - so if you have $500k and want to throw $50k ok - but it still hurts. if its your first and only 50k, there are plenty of other opportunities out there to get in the game for less

For many - Goes back to greed and FOMO as well, last few years everyone and their brother wanted to jump in on the STR and MF space because of these great returns - no different than NFT's and bitcoin before that, but when something moves up quickly, it typically drops pretty quickly as well. Next we are going to see it on all this crazy "creative finance" that is going around where people are buying or selling via seller finance to those who are unqualified...

This is exactly why we invest as an investment club into deals at much smaller amounts than the $50k/$100k minimums. Even for accredited & high income investors, losing $50k/$100k still stings. Pooling and investing at $5k/$10k is a much softer blow. Lowers your risk of any single investment (whether fraudulent or just poorly executed) taking down your whole ship. And I’m not talking about a fund of funds. I’m talking about age old investment clubs. 

[Rick Bassett]

I listen to RE podcast pretty frequently and Marco's was one of them I used to listen to up until a few months ago. 

I recall him talking about investing in Show Productions and me thinking what the heck does this have to to with RE investing? Then I heard the pitch for outsized returns, think it was around 15%, and then financing Show Productions made more sense when they are using OPM...not mine...seemed too good to be true...unfollowed.

[Chris Seveney]

Btw anyone see a common thread between this, lane k. ODC, Rad etc and others who have been making headlines on BP?

Oh, they are all out there right now on the “training / membership” circuit trying to sell you on a lifestyle or an investment strategy. Atleast I don’t get FB ads from Norada.

[James Wise]

Quote from @Chris Seveney:

Btw anyone see a common thread between this, lane k. ODC, Rad etc and others who have been making headlines on BP?

Oh, they are all out there right now on the “training / membership” circuit trying to sell you on a lifestyle or an investment strategy. Atleast I don’t get FB ads from Norada.

 I haven't seen or heard anything about lane k, ODC or Rad............Post the links.

[Chris Seveney]

Quote from @James Wise:

Quote from @Chris Seveney:

Btw anyone see a common thread between this, lane k. ODC, Rad etc and others who have been making headlines on BP?

Oh, they are all out there right now on the “training / membership” circuit trying to sell you on a lifestyle or an investment strategy. Atleast I don’t get FB ads from Norada.

 I haven't seen or heard anything about lane k, ODC or Rad............Post the links.

Here you go.

RAD Diversified Review — It Wasn't Pretty (biggerpockets.com)
RAD Diversified SCAM ALERT!!! (biggerpockets.com)
PEP fund with Lane Kawaoka (biggerpockets.com)
Syndicator Threatens LPs for Negative Comment about them On BP (biggerpockets.com)

Anyone has invested with Open door capital? How was your experience? (biggerpockets.com)

[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...

[Jay Hinrichs]

Quote from @Chris Seveney:

Quote from @James Wise:

Quote from @Chris Seveney:

Btw anyone see a common thread between this, lane k. ODC, Rad etc and others who have been making headlines on BP?

Oh, they are all out there right now on the “training / membership” circuit trying to sell you on a lifestyle or an investment strategy. Atleast I don’t get FB ads from Norada.

 I haven't seen or heard anything about lane k, ODC or Rad............Post the links.

Here you go.

RAD Diversified Review — It Wasn't Pretty (biggerpockets.com)
RAD Diversified SCAM ALERT!!! (biggerpockets.com)
PEP fund with Lane Kawaoka (biggerpockets.com)
Syndicator Threatens LPs for Negative Comment about them On BP (biggerpockets.com)

Anyone has invested with Open door capital? How was your experience? (biggerpockets.com)

ashcroft also had a long thread on BP..  I think there are many MF syndications redoing their deals.

[Jay Hinrichs]

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...

this will be very expensive litigation as it will be a follow the money type thing with forensic audits most likely.  so for the 50k investor suing is probably not a money making proposition your most likly not going to get attorney fee's if you litigate and win.. and lets be realistic here how long will it take to actually GET a Judgement ?  years most likely.. While I agree with the thought process I think reality will be far different..

Personally I think the investors need to rely on Reputation saving moves by Norada and potentially a voluntary work out  over a very long term.. If I was in these investors shoes thats what I would be working towards. Folks with big money in this like 500k to 1mil or so that would be a different tactic.  IMHO

[Jon P.]

@Jay Hinrichs if fraud is identified, then there would be damage recovery for parties including possible attorney fees.  Based on what has been uncovered so far with the partnership between Marco and Ronald Fossum who has already been guilty of defrauding investors and barred by the SEC from participating in activity like this, I would say, yeah, there is a high likelihood of fraud in this case.  Not to mention that Norada still is advertising private investment opportunities paying 17%, etc.  That has Ponzi written all over it.  I've seen the SEC come in and shut down bad operators immediately as a risk to the public when they continue to raise money like this.  I think the SEC needs to be made aware of this immediately.  I'm sure they would be very interested to know the involvement of Ron Fossum as well.  The sooner the SEC gets involved, the more likely that investors having a fighting chance to get some intervention before even more money disappears into thin air.  Why is Norada allowed to still raise money like this when they lost millions for many unaccredited investors?

So I agree that a private law suit may not be financially worth it for someone that invested a lower amount of capital, but we can see that there are people that have already posted on BP that they invested huge amounts like $850,000 for one person, and >$1M for another.  If I were in their shoes, I would have my attorney on speed dial to get the first in line before Norada gets wiped out and bankruptcy is filed.  Once you are in that scenario, all hope is lost of recovery.  The smaller investors could look to pool resources to potentially a class action.  Regardless, the initial conversations need to be had with attorney's to get their input and the SEC needs to be made aware of the situation along with the involvement of parties that have already been convicted of defrauding investors!

[Chris Seveney]

@Jay Hinrichs

I agree. I also think people need to get more info as they only stopped distributions - what if they had enough to pay everyone back their principal and monies to do were reclassified as return of capital. If that were the case - would there be harm? I doubt any regulator would look into it.

Everything right now is just speculation

[Jon P.]

Lastly, I believe the web of involvement extends to many other financial parties as well.  It will be interesting to see how all this plays out during an investigation, but I sure hope that the money can be followed for the investors' sake that were damaged here.

I've also been made aware that a company, Tardus Wealth Strategies, who "coaches investors on financial independence in 10 years or less" was heavily promoting the Norada fund to unaccredited investors and was also heavily promoting Ron Fossum.  It sounds like there was multiple webinars conducted by Ron Fossum and Marco supported by Tardus to hundreds of investors that also invested heavily in the Norada fund.  I believe there are many groups that helped promote the Norada fund without doing any preliminary research on what the investments entailed or the criminal history of the people involved putting together the "investment opportunity."  I think this is something bigger than many of us realize, but this is just the beginning of the house of cards.  It appears Norada has been sending out unaudited balance sheets to investors asking about their financials that shows over $100M valuation in these seemingly bankrupt businesses they invested in.

[Jay Hinrichs]

Quote from @Jon P.:

Lastly, I believe the web of involvement extends to many other financial parties as well.  It will be interesting to see how all this plays out during an investigation, but I sure hope that the money can be followed for the investors' sake that were damaged here.

I've also been made aware that a company, Tardus Wealth Strategies, who "coaches investors on financial independence in 10 years or less" was heavily promoting the Norada fund to unaccredited investors and was also heavily promoting Ron Fossum.  It sounds like there was multiple webinars conducted by Ron Fossum and Marco supported by Tardus to hundreds of investors that also invested heavily in the Norada fund.  I believe there are many groups that helped promote the Norada fund without doing any preliminary research on what the investments entailed or the criminal history of the people involved putting together the "investment opportunity."  I think this is something bigger than many of us realize, but this is just the beginning of the house of cards.  It appears Norada has been sending out unaudited balance sheets to investors asking about their financials that shows over $100M valuation in these seemingly bankrupt businesses they invested in.

Jon are you an attorney ?  just curious. 

[James Hamling]

Quote from @Jon P.:

....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....

Ok this is a serious question Jon, and line of discussion, but it's gonna come off cheeky because there is just no way around it and the entire premise of my question/discussion is blunt-reality; 

I am curious just what you or those who invested in this expected? 

The talk seems to be more as if these people invested in Bank Bonds, CD's or something. What I read of the Note Offering before it was recently changed, it READILY presented as a hail-marry business strategy. At best. 

These weren't some under funded new launch companies who flopped because needed better help at start, no, we are talking BIG companies who looong had there day in the sun, and over considerable time declined into nothing because there business model was no longer effective or relevant.     So a scheme of "hey, let's just put it online and it will all work out" sounds a lot to me as if a bunch of 4th graders took over Blockbuster. That seems a long shot of long shots. 

So I am confused with where all talk is going now framing things as if it was not a VERY high risk investment. Not to mention the insanely high distributions. So it was UNPROVEN investment model, a very HIGH risk venture, done with UNREALISTIC return projections......     How does all this not scream risk Risk RISK.... 

And it IS relevant to the now, because with it failing and looking to be all but failed, now there seems to be a laundry list of very serious illegal activity accusations and NONE from I've read of "oh dang, it didn't work".... 

This was the most high risk investment I've ever seen, and keep in mind I've done oil, gas & mineral exploration investments so that's really saying something. 

I just don't understand how it's being framed as though it "should have" paid out and returned just fine or that it was a shocker such investment did less than perfect. With such a high risk investment the odd's are it WON'T work out, that's why the returns are so high....... 

I just don't understand how this is all being framed now. When something is stated in such polarized absolutes, I find it is rarely accurate. 

[Don Konipol]

Could it be a BAD investment strategy AND fraud in the disclosures, method of marketing securities and or providing misleading information?

For example, did the sponsor know the investment had no chance of success, but sold it to investors anyway to make fees and commissions? How responsible are ACCREDITED investors for doing their own research and due diligence.  Was this a Reg D filing?  If so, which section?  

It's just hard to believe so many investors believing that this investment strategy was anything but ridiculous. Apparently offer 2% more than hard money (secured by real property at no more than 65% LTV) and all reasoning goes out the window.

This wasn’t a failure (if it is a failure) because of purchasing at the top; the economy crashed; pandemic closing everything down; or a massive failure of the financial system.  This was buying dead brands where PROFESSIONALS in those particular industries in question couldn’t avoid bankruptcy and every single major brand in those industries failed to bid even a minimal amount to buy those brand names  - because they knew those brand names were worthless.  

Bigger question - why the heck is corporate junk bond investments being discussed on a REAL ESTATE forum? 

[V.G Jason]

Quote from @Chris Seveney:

Btw anyone see a common thread between this, lane k. ODC, Rad etc and others who have been making headlines on BP?

Oh, they are all out there right now on the “training / membership” circuit trying to sell you on a lifestyle or an investment strategy. Atleast I don’t get FB ads from Norada.

ODC is just a BP's pride & joy falling flat on his face, I don't think ODC is a scam. I believe ODC just showed how little of it was skill and how much of it was luck post GR and the reality of success.

Basically, a retarded blind monkey could've been a successful REI in 2013. Sorry for my french, but that's just the reality of it. The same way of being successful in RE does not work post H2 22. And the king of ODC, BP's pride & joy, is just blatantly incompetent I don't think he's a fraud. I understand he's got a family to feed and a lifestyle to support, but I think RAD is the most fraudulent. Then Lame, and honestly Norada is creeping up given what he actually invested in. Marco either got the wool pulled over him or he's just as a predatory, I hope the former. But ODC is just a guy who wasn't as smart as he thought he was proving it. 

It's definitely predatory to be selling a "training" membership,  much like it is for RTR and their nonsense academy which promotes buying properties that don't meet appraisals through their anecdotal "success" stories. Those two are more akin. I don't think it's on that tier of Lame, RAD, and seems to be Norada though. One's criminal, the other is just advertising unfortunately. 

[Jay Hinrichs]

Quote from @Don Konipol:

Could it be a BAD investment strategy AND fraud in the disclosures, method of marketing securities and or providing misleading information?

For example, did the sponsor know the investment had no chance of success, but sold it to investors anyway to make fees and commissions? How responsible are ACCREDITED investors for doing their own research and due diligence.  Was this a Reg D filing?  If so, which section?  

It's just hard to believe so many investors believing that this investment strategy was anything but ridiculous. Apparently offer 2% more than hard money (secured by real property at no more than 65% LTV) and all reasoning goes out the window.

This wasn’t a failure (if it is a failure) because of purchasing at the top; the economy crashed; pandemic closing everything down; or a massive failure of the financial system.  This was buying dead brands where PROFESSIONALS in those particular industries in question couldn’t avoid bankruptcy and every single major brand in those industries failed to bid even a minimal amount to buy those brand names  - because they knew those brand names were worthless.  

Bigger question - why the heck is corporate junk bond investments being discussed on a REAL ESTATE forum? 

Don when I lived in Napa I was at a cocktail party of a buddy Who was very well connected in the corporate world being a Brand president for one of Nestles companies. ... But I got to talking to one of his guests and that is exactly what he did.. He bought defunct brands and was  reviving them Like Bermashave and other names of yesteryear and I know there has been some success in the mid west buying old BEER brands and reviving those.. But this was late 90s so way before on line stuff had taken off. Although the Dot com stuff was big time in the SF bay area then as well. 99% of those imploded of course but a lot of them are now successful in Dotcom 2.0. So I can see how someone might get talked into this buying of old brand names.. Not sure how they talk others into investing in them though but its quite apparent that these folks made a big departure from RE and took a flyer on these notes..

[Chris Clothier]

I'm still not going to post at length here as there is clearly more to come out, but the past few posts are interesting to me. 

I think one critical piece is being overlooked.  It is my opinion, that in order to get investors to look to the left while you are showing them on the right what the investment entails, you have to have a brand with a good reputation using their list to raise money.  If investors believed, as most emails I have received from this company going back to 2012 have made it appear, that this was a real estate company doing real estate business, then many investors may have simply let their guard down.  Many may not have known or understood what they were investing in.  They may have been looking left and preparing for a 12%, 15%, 17% return and never paid attention to the risks on the right.  Many were clearly caught off guard by the detail that their distribution could be halted and their investment converted to stock.  

I would think you have to have a very specific audience to go for this type of investment and pre-existing trust is at the top of the list.  An audience that has been built over a long period of time and with a lot of faith and belief in the personality presenting is one that is most prepared to invest without question and most likely to be attracted to the high returns.  The audience is pre-disposed to believe. 

[Michael P.]

Appears his podcast started in June 2019; or 9 years of "cultivating trust".
https://www.passiverealestateinvesting.com/what-is-passive-r...

[Jon P.]

@Jay Hinrichs I am not an attorney, but I'm thankfully connected with some very good ones, and they are interested to learn more about this case working in the fraud sector.

For your comments on Tardus, I am not sure if they took compensation or not for referring their clients to invest in Norada.  All I can say is that it's quite obvious that they highly encouraged people to invest in Norada.  I've spoken to numerous Tardus members already that said their "coach" recommended Norada as one of the best investments currently available.  If they are not licensed financial advisors, shouldn't they not be recommending any investments or securities, especially if they are not licensed RAs?  It appears Tardus is also very adamant about defending Ron Fossum.  They seem to have a long standing relationship with him.

Also, what about the Norada sales reps that sold this investment offering with proper licensing?  I mean, I can't say for sure, but I would venture to guess that they are 1099 sales folks paid on commission for selling these investments, and my best guess would be that they are not licensed to sell securities.  They are definitely getting paid for it.  Would there be any liability there in your opinion?  I know I spoke to a guy Michael Johnson, and I've heard others working with Nate Hall on their team.  I'm not 100% sure, but I believe these guys are still selling the new "investment option" they are now marketing at 17% returns when they are not paying investors in current notes.  Again, just another layer here of things that were handled inappropriately all around from licensing, marketing, disclosures, etc.  Of course, in addition to the fact Ron Fossum, Norada's CFO, has history of defrauding investors with the SEC and was banned from any future activity like this.

[Carlos Ptriawan]

Quote from @Jon P.:

@Jay Hinrichs I am not an attorney, but I'm thankfully connected with some very good ones, and they are interested to learn more about this case working in the fraud sector.

For your comments on Tardus, I am not sure if they took compensation or not for referring their clients to invest in Norada.  All I can say is that it's quite obvious that they highly encouraged people to invest in Norada.  I've spoken to numerous Tardus members already that said their "coach" recommended Norada as one of the best investments currently available.  If they are not licensed financial advisors, shouldn't they not be recommending any investments or securities, especially if they are not licensed RAs?  It appears Tardus is also very adamant about defending Ron Fossum.  They seem to have a long standing relationship with him.

Also, what about the Norada sales reps that sold this investment offering with proper licensing?  I mean, I can't say for sure, but I would venture to guess that they are 1099 sales folks paid on commission for selling these investments, and my best guess would be that they are not licensed to sell securities.  They are definitely getting paid for it.  Would there be any liability there in your opinion?  I know I spoke to a guy Michael Johnson, and I've heard others working with Nate Hall on their team.  I'm not 100% sure, but I believe these guys are still selling the new "investment option" they are now marketing at 17% returns when they are not paying investors in current notes.  Again, just another layer here of things that were handled inappropriately all around from licensing, marketing, disclosures, etc.  Of course, in addition to the fact Ron Fossum, Norada's CFO, has history of defrauding investors with the SEC and was banned from any future activity like this.

 And that’s the typical Ponzi scheme

the tardus guy in our case has to pay back all their commission to the SEC or facing jail time.