I understand the blanket, public answer about being investment agnostic, educating people about risk, blah blah blah...
The reality is that many Tardus investors have already commented that their coach actually recommended Norada as the best investment option along with the owners doing webinars with Marco promoting his investments...
Still no communication or update from Marco even though we were all told more info would come out. Looks like multiple people have already filed lawsuits and reported to SEC. We will see where this goes. If Marco was truly sincere about trying to turn the ship around, he would at least communicate with the people that he & his sales team convinced to cash in their entire retirement savings to invest in his "bulletproof" investment opportunities...
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.
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.
@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 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.
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:
Wow!
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.
UPDATE:
Many people received this standard notification from Norada yesterday. Looks like money is gone. This contradicts what was previous stated that interest payments were "suspended temporarily" but now seem to be indefinite...
How do others interpret this?
Email from Marco at Norada :
--
Dear Investor,
We hope you had a pleasant July 4th long weekend.
As promised, we've compiled the most commonly asked questions our investors have been asking below, along with concise answers.
What does conversion to equity mean to promissory note holders?
It means your note investment (principal) and any accrued interest were converted to equity in Norada Capital Management LLC.
Where is my money invested now?
You are now invested as an equity shareholder in Norada Capital Management. You now stand to benefit from any future gains in company and share value and any distributions paid to shareholders as determined by management. As mentioned in our communications, Management will provide a full breakdown of investment allocation across Norada's portfolio businesses in the coming days.
Will there be continued interest payments?
Once a note is converted to equity, there are no longer continued interest payments. You are a shareholder and benefit from potential future gains in share value, cash distributions, and redemptions from liquidity distribution events.
What led to the decision to suspend payments?
After thorough deliberation and analysis of market conditions, the cash distribution position of our investments, and our current financial position, we decided to suspend distribution payments and convert Promissory Notes to equity.
What are these “market conditions”?
Tight capital markets, slower-than-expected revenue growth with our portfolio businesses, and the overall cash position and distribution schedules of our portfolio businesses.
When will I receive a financial report?
Financial reports will be provided in the next few weeks as part of our asset analysis to determine company and share value.
Do any assets need to be sold in order to pay investors?
No. Our focus will be on growing and scaling our existing business assets to increase market value, revenues, cash flows, and profits. That will lead to future distributions for Norada Capital as well as potential liquidation and/or exit events generating larger cash inflows to redeem Investor shares.
Is the plan to return the investor's original principal or continue to make interest payments as was scheduled for the term of our investment?
Currently, the plan is to redeem investor's shares as soon as it becomes financially feasible. This will be carefully determined so as not to put the company or its investors at unnecessary risk.
Can you share the mechanics of how and when that can be redeemed?
Redemption is the repurchase of your equity as determined by the company. It is not something the investor can choose to do at their option. It is also not based on the Promissory Note maturity date prior to the conversion to equity.
Are the shares liquid to the investor?
Shares are not liquid. They can be redeemed by the company at any time or sold privately to another investor with the approval of Norada Capital. The par value of the investment will be the original principal balance plus any accrued but unpaid interest.
Do we have voting rights?
Your equity ownership is not voting shares/units.
Will there be a summary accounting outlining the equity held by each investor?
Yes, an accounting breakdown of equity held by the investor will be released in a few weeks.
Is the conversion temporary? Will equity be converted back into a promissory note?
A conversion is not temporary. You now own equity in the company. However, as soon as it is financially feasible, the Company will redeem shareholders of their equity interest, which will, again, be calculated on par value or the original principal balance plus any accrued but unpaid interest.
Does Norada Capital have the right to buy back (redeem) the shares at any time?
Yes, Norada Capital has the sole right to redeem your shares by purchasing them at the market value at the time of redemption.
Is anything in the Note enforceable now that my investment is converted to equity?
Your original Note no longer exists once it has been converted to equity. You are now on the company's Capitalization table and are operated by its Operating Agreement.
What accounting or documentation will there be to show the value of my shares?
Financial statements and related documents will be updated and provided to establish the current share value.
Are high interest rates causing this, or are some business assets failing?
It's a combination of tight capital markets, slower-than-expected distributions, and debt service payments that current revenues were not keeping pace with.
Are you able to restructure the loans, albeit at a lower rate?
Third-party refinancing is not an option at this time.
You've been around for a while and been through restructuring, refinancing, and streamlining. What is your estimation of how "temporary" this will be?
A timeline is difficult to establish at this point. Once we have a better idea of our business holdings' future distributions and possible liquidation events, it will be easier to provide a timeline for the redemption of your shares.
What are the strategic steps being taken to maintain solvency and stay in business?
We are taking strategic steps to strengthen the company's financial health, including cost-reduction measures, revenue-generating initiatives, and debt restructuring options. Our team is dedicated to navigating through these challenges and emerging stronger.
Will you provide scheduled updates on the status of Norada Capital?
Yes, there will be regular updates over the coming weeks and months.
We fully recognize that you may have additional questions, and we are more than willing to address them over the coming weeks.
Thank you for your patience, understanding, and continued support. We value your trust and are committed to ensuring our partnership remains strong and beneficial for both parties.
Sincerely,
Marco Santarelli
Norada
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.
@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.