Norada Capital Management Promissory note investment
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Norada Capital Management Promissory note investment
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Norada Capital Management Fraud Report
Imagine how truly deplorable an investment opportunity is when the introduction, the three strongest points in the report to be explained, cannot even include guaranteed returns of up to 17% annually. That is how tragic this 12-year run of financial fraud appears to be as explained in this report on the Laguna Niguel, California based Norada Capital Management.
Several problematic findings arose when researching Norada Capital Management.
1. Longevity of the Scheme: According to Marco Santarelli, the Founder and CEO of both Norada Capital Management and Norada Real Estate Investment, the company began raising investor funds through promissory notes as early as 2012.2. Concealed CFO: Mr. Ron Fossum, Norada Capital Management’s cleverly concealed CFO, was barred by the SEC in 2018 for similar fraudulent activities to those he appears to be engaging in now at Norada Capital Management.3. Material Misrepresentations: Norada Capital Management's misleading claims include:a. The business plan to pay untenable returns is not untenable, it’s non-existent. The company’s claim to have relaunch failed big name retailers is complete fiction.b. The company’s cleverly concealed CFO was barred by the SEC in 2018 for a $20 million, 100 victim fraud. No investor would place their money with Norada Capital Management if they knew this material, omitted information about the CFO.c. Promissory loan notes are “secured” by Norada Capital Management where, in our taped call, is a $120 million-dollar public company with $70 million in owed loan notes to investors and $50 million in “equity” which is all a lie. d. The cumulative public image of Mr. Santarelli as an absolute industry expert (podcast, websites, press, social media advertisement) cause investors to have a false sense of security.
The company asserts that proceeds from investor funds, exchanged for loan notes with guaranteed annual returns, were used to purchase websites and customer lists of large, national retailers that filed for Chapter 7 in 2020 or 2021, which Mr. Santarelli allegedly purchased from a government auction from the bankruptcy trustee and relaunched online. In two detailed YouTube videos, Santarelli names each company and recounts fictional stories of his involvement in their successful through the online relaunching by Norada Capital Management. None of this never happened.
For a company with a 12-year lending history, Norada Capital Management has only one $4,000,000 Reg D filing from 2020, which appears inadequate considering a 2012 start date and almost four years since the last filing.
Santarelli also claims in the same YouTube video that Norada Capital Management has been making loans since 2012 with no default history, re-lending money received from investors and maintaining a perfect record over 12 years. More concerning is the new Florida-based entity, Themed STR Capital Fund, set to launch in 2025, for which Santarelli is a fund manager. This entity is currently raising funds from investors with promises of 82% returns.
Ron Fossum, dissatisfied with his simple, concealed role at Norada Capital Management, is also involved other business ventures, none of which appear to be legal. Accessible through a link in his Linked in profile is the Emergency Business Relief( Link ), which claims to have recovered “over $300 million for clients,” through various Covid-19 and other government programs. Law enforcement is now targeting third parties involved in “cooking the books” that “force by fraud” qualify clients for Covid-19 relief. And we are just beginning.
Norada Capital Management ( )
30251 Golden Lantern # E-261
Laguna Niguel, CA - 92677-5993Professional poker players call it a “tell.” In financial fraud detection, the pitch by Norada Capital Management is our equivalent of a “tell”:
“So, here’s the deal. So for a limited time, a very limited time, and I’m thinking probably till the end of August, the last day of August being kind of the drop date, if you will. We are offering a 2% bonus on top of the existing pay structure or terms, which means that instead of 12% or 15% per year paid monthly, it will be 14% or 17% interest paid monthly on those promissory notes,” ( ).
Translation? Norada Capital Management and its President and Founder Marco Santarelli are so desperate to raise money that they have resorted to guaranteeing investors up to a 17% annual returns. According to the company:
“Norada Capital Management allows investors to invest in promissory notes. These notes start at $50,000 to over $200,000 and feature an annual interest rate of 12%-16.7%. The company offers promissory notes worth $50k, $100k, and $200k+, with annual interest rates ranging between 12% and 16.7% depending on the investment amount. These rates of return surpass what bank-provided bonds and stock dividends offer. Norada’s promissory notes generate predictable monthly passive income transferred to the investor’s funding account via ACH,” ( ).
Santarelli confirms these fixed, double digit returns in a detailed YouTube video presentation (Link, at 35:08). However, this is not the first time the company has offered over 17% annual returns. A post on the official Norada Capital Management website from 2022 (attached screenshots in addendum), boldly states the following:
“Norada Capital Management offers investors opportunities to invest in Promissory Notes with fixed rates of return ranging from 12% up to 17.5% per year,” ( Link ).
In explaining the use of proceeds from the promissory notes—specifically the entities Norada Capital Management, a private equity firm, supposedly lends to in order to generate these high annual rates, the company states that:
“Three of those five categories that our company invests in as a private equity firm include e-commerce-based businesses very lucrative area, especially if you’re in the right area of e-commerce. But e-commerce has been around for several decades now and continues to grow.”
In the lengthy “Marco Santarelli” YouTube videos, he explains that small business lending through promissory notes generates higher returns for investors than treasury notes, hard money lending, and real estate trust deed notes ( Link, at 29:42). If the potential investor is still not convinced, he states that since 2012,every loan note has been repaid, a better track record over 12 years than any lender in American business history.
Source: ( Link, 36:10 )Norada Real Estate Investments, according to the Passive Real Estate Investing website:
“Marco Santarelli is an investor, author, and founder of Norada Real Estate Investments ( Link ) — a national real estate investment firm offering turnkey investment property in growth markets nationwide,” ( Link ).
In contrast to Norada Capital Management, Norada Real Estate Investment does not raise money from investors. Instead, they get compensated by Turnkey providers or builders with a marketing fee:
“…we as the turnkey property promoter gets compensated by and only by the turnkey provider or builder that we are working with, they are essentially paying a marketing fee,” ( Link ).
The company lists single family homes in certain targeted markets and, through their “knowledgeable investment counselors,” put sellers (the owners of the various properties) and buyers (who they educate, prepare and counsel) together and in the process Norada Real Estate Investment receives a marketing fee. To the company’s credit, the site appears functional and impressive.
More about Norada Capital Management, Norada Real Estate Investing Marco Santarelli and the infamous CFO, Ron Fossum:
Mr. Santarelli, in two YouTube videos explains the promissory notes investment opportunity (Link), and mentions some of his other ventures including, “cannabis and crypto investing” and producing/co-producing six new Broadway musicals. This implies that one of the “clients” paying Norada Capital Management a high enough interest rate to justify the returns promised to investors is Mr. Santarelli’s musical productions.
Disproving a negative is challenging, and the representations ofMarco Santarelli about how Norada Capital Management guarantees up to 17% annual returns need addressing. In the one-hour YouTube videos, Santarelli reveals the secrets to his revenue-generating methodology. Slides are presented one by one including one titled, “Norada Capital’s Diversification.” The slides list 12 well companies. Some companies include Stein Mart, RadioShack and Pier 1.
Source: ( Link, 36:15)Santarelli claims Norada Capital Management pivoted around 2020, Santarelli states he that he offered these companies "LOI" (letter of intent) offering to buy all of their intellectual property, brand names, trademarks, websites and customer databases from bankrupt entities like Dressbarn. Basically, Santarelli and his team saw that big retailers were in trouble (37:00 in YouTube video).
Norada Capital Management could now market to the customer databases of these bankrupt entities. The first acquisition, according to Santarelli, was Dressbarn, a nationwide retail brand that “we bought,” (37:18). Santarelli, in the second of the two videos given to perspective investors, adds that Dressbarn was purchased at the “Federal Bankruptcy Auction,” and that Norada Capital Management walked away with all the intellectual property for the company which includes the trademarks, the brand name and equity, the website, the URLS, and most importantly the customer data base ( Link, 18:05 to 18:26).
Then, the Santarelli marketing team continued Dressbarn online and devised a campaign to drive traffic to the site (37:30). This model (Dressbarn), according to Santarelli, was so successful that they duplicated it over and over again (37:44). The next company was Pier 1 ( Link at 18:46-18:49). The duplication is mentioned by name by Santarelli and on the slide also included the following entities: Linens and Things, Stein Mart, Modell’s Sporting Goods, and RadioShack (37:52). In the second investor video, Santarelli states that he is 100% owner of Bodybuilding.com (Link 19:08 to 19:28). Depending on the video no less than 34% of all lending went into this fictitious venture. Another of the “use of proceeds” of promissory note loan funds is Mr. Santarelli’s musical productions.
Material Misrepresentations by Santarelli Defy Logic
Three critical misrepresentations need to addressed from the two investor video presentations which highlight the audacity of this scheme. Starting with Dressbarn which Santarelli claims to have successfully relaunched paving the way for other big-name retailers.
When comparing what Mr. Santarelli presents in the videos and investor offering materials with objective, and independent sources in an effort to corroborate, significant discrepancies are revealed. According to the current and official Dressbarnwebsite, “REV” is the owner of Dressbarn:
“Dressbarn is an online retailer linked to a former chain of women's clothing stores owned and operated from 1962 until 2019. Retail Ecommerce Ventures (REV) acquired Dressbarnto relaunch the brand online.” ( Link )
This suggests that Norada Capital Management or Mr. Santarelli would have to be connected to, or own a controlling stake in REV. However, this does not appear to be the case. Rev, founded by Alex Mehr and Tai Lopez, have no connection whatsoever that we could find despite our background searches (included in this report) nor in any news or business publication. In contrast, Rev raised approximately $260 million, bought the rights to all of the same, exact, Santarelli mentioned entities out of bankruptcy as well as the bankrupt retail businesses’ intellectual property, and relaunched them as online-only brands. REV’s holdings included RadioShack, Pier 1, Stien Mart, Linens-N-Things, and Modell’s Sporting Goods. How did Zoosk and Lopez, raise $260 million from investors? They simply took a play out of the Santarelli and Fossum financial fraud playbook and promised 25% annual returns to investors.
Unfortunately for those investors, by late 2022, investors stopped receiving payments and were literally “re-upped” or re-solicited by Lopez and Mehr for more money to help them avoid bankruptcy. In early 2023, retailer “Tuesday Morning” filed for Chapter 11 bankruptcy ( Link ), which was only months after REV purchased a controlling stake in the company for $35 million.
The point of this explanation is the absence of any mention or connection to Marco Santarelli or Norada Capital Management.The entire business model that is said to be a material part of generating the revenue to pay the returns of up to 17% annually appears to be a complete fabrication. Companies specifically mentioned by Santarelli as having been purchased with Norada Capital Management investor funds, for pennies on the dollar, and secured by promissory notes are literally refuted by the real buyers of these big-name brands out of bankruptcy. The following CNN articles written when REV was first purchasing these entities states that:
“Retail Ecommerce Ventures (REV), an investment firm that buys beleaguered brands and relaunches them online, announced Wednesday it bought the intellectual property of Stein Mart for $6 million. It’s the latest struggling brand that REV has purchased, joining Pier 1, Modell’s Sporting Goods and, most recently, RadioShack,” ( Link ).
These references reveal the depth of the Norada Capital Management deception. As for Santarelli’s claim of owningBodybuilding.com, a July 1, 2022 official press release from Bodybuilding.com states that:
Source: ( Link )
The only deception as brazen as these business model misrepresentations, is Santarelli’s concealing of the SEC-barred CFO of Norada Capital Management, Ron Fussum.
Hiding the CFO
If you look at the LinkedIn profile of Norada Capital Management CFO, Ron Fossum, you will not see any reference to his position as CFO of the company ( Link ). Similarly, the Norada Capital Management website does not list Fossum as CFO of the company. Investors must first prove that they are an accredited investor, set up a “pitch” call, and only then will they receive a 16-page PDF explaining the loan program, which on page 10, shows a picture of Ron Fossum as CFO:
Page 10 of email attachment “noradaloannotecasepdf”A detailed FINRA report ( Link ) provides the reason for this sleight of hand. Fossum's LinkedIn profile confirms past employment with Mutual of Omaha from 1999 to 2009. His current career, according to LinkedIn, is as Senior Partner at Growth Management Group, LLC from 1999 to present. There is no mention of his role as CFO at Norada Capital Management. In contrast, Fossum's resume on Taxplanwealth.com ( Link ), details every aspect of his life including his girlfriend in kindergarten and everyplace he has worked in the last 30 years. But somehow fails to disclose his position as CFO of Norada Capital Management. And for good reason. The omission is intentional resulting from Fossum’s lead role in a $20-million dollar promissory loan note fraud case filed by the SEC ( Link ), which resulted in a settlement barring Fossum from engaging in similar activities, such as his role with Norada Capital Management ( Link ).
The case, filed by the SEC in December 2017 and running for five years, alleges that from March 2011 to June 2016, Fossum raised over $20 million from more than 100 investors through unregistered securities offerings of three investment funds he owned and controlled: Accelerated Asset Group, Smart Money Secured Income Fund, and Turnkey Investment Fund. The SEC claims Fossum misappropriated hundreds of thousands of dollars from the funds by living rent-free in a fund-owned home and having the funds pay for extensive international travel and his federal taxes. Part of the scheme involved issuing “Accelerated Promissory Notes” offering a fixed 12% annual return over four years ( Link ).
On page 8 of the SEC’s charging document, part of the scheme was issuing to investors “Accelerated Promissory Notes” that offered a fixed 12% annual return over four years ( Link ).
That this is the same “Ron Fossum,” is clear from his included background search. First, the SEC specifically charged him with using SMFG, INC. as one of the entities to defraud investors, (please see “The SEC alleges that Fossummisappropriated hundreds of thousands of dollars of SMFG Fund”), an entity he formed with Jared Crapson in 2008. For the sake of thoroughness, his job at Mutual of Omaha corroborated on his LinkedIn profile and FINRA; and at the time of his December, 2017 offense he was 50 and the background shows he is 57 years old. The residences and addresses in the State of Washington also confirm that Ron Fossum is the current CFO of Norada Capital Management and the former defendant in the settled 2018 SEC legal action.
Fossum’s criminal activity appears to extend beyond his past fraud with the three above-mentioned funds and his concealed position as CFO at Norada Capital Management. According to his LinkedIn profile, he is also the architect of a Michigan based Covid Relief firm ( Link ), that boasts of securing over $300 million for its clients.
Source: ( Link )The primary function of Emergency Business Relief appears to be Covid-19 Relief, The website states:
Source: ( Link )According to the FBI:
“the U.S. Small Business Administration inspector general estimates $136 billion in fraud from the EIDL and $64 billion in fraud from the PPP. For FPUC, the U.S. Government Accountability Office estimates more than $100 billion in fraud,” ( Link )
More recently, the complicity of company’s like Emergency Business Relief are now targets of criminal investigations. On page 14 of the Justice Department’s detailed report on prosecutions of Covid-19 relief fraud, it states that:
Source: ( Link )Remember, the website of Emergency Business Relief boasts of securing and or recovering “$300 million” for its clients. Law enforcement would benefit greatly (as will taxpayers) from even a cursory examination of Emergency Business Relief based on the dollar amount involved and more thorough understanding of the owner, Ron Fossum, documented history of financial fraud.
Reg D filings for Marco Santarelli, Another Entity, and 82% Returns:
A search of the SEC database confirms that Norada Capital Management, not Norada Real Estate Investments, raises money from investors. Two Reg D filings were found, separated by four years. The first dated November 27, 2020 was to raise$4,000,000 for Norada Capital Management ( Link ). The second, filed on January 24, 2024, is for another entity in Florida seeking to raise up to $50,000,000. That entity, “THEMED STR CAPITAL FUND LLC,” ( Link ), lists Marco Santarelli, and Josh Luttrell, who is the "Managing Partner" for of Themed STR Capital Fund ( Link ).
Marco Santarelli is the “Fund Manager” of Themed STR Capital Fund LLC. Although there is no working website for the company, a 41-minute YouTube video from November 2023 describes the fund, its investment opportunity, and its leadership ( Link ). In the video at 3:07, Luttrell states that he and Marco Santarelli are the “fund managers.” The company aims to raise funds from investors to purchase single-family homes, primarily in Florida, improve them, rent the properties, and eventually resell them (11:33). Investors can expect an unprecedented projected profit of “32.89% cash flow, 48% return on sale, total return 81.38%,” (28:12). The company will be fully running in 2025 and is in the process of raising capital (32:47-50).
This evidence showcases a pattern by Santarelli of raising money, by offering returns that defy logic. Like me and all other financial perpetrators of fraud—past and present—Mr. Santarellihas perfected the art of lying to get money. Moreover, he, like the Reg D multifamily promoters, lie about what they owe, lie about what the earn and lie about what they own. All three are present in this case.
The most troubling issue with the Reg D filings for Norada Capital Management is that Santarelli regularly boasts of a “default free track record,” dating back to 2012 ( Link at 36:10).This implies Santarelli has been raising funds without a corresponding regularly and timely filed exemption—one filing at $4,000,000 is not enough to cover the over $70 million said to be raised during my taped call. Moreover, that last Norada Capital Management filing for $4,000,000 was almost four years ago, in November 2020. Since then, the company has only increased efforts to raise investor funds but does not appear to have kept up with the corresponding regulatory filings. Thecompany continues to advertise on Google with paid ads.
Source: Google Ads for Norada Capital ( Link )Summary of Red Flags and Conclusion:
This report is not intended to be an exhaustive account of every material misrepresentation and apparent securities violations, but it provides more than ample evidence to show the following critical issues:
1. Danger to Investment Community: Norada Capital Management has managed a 12-year run which is a danger past and present to the investment community.2. Aggressive Advertising: The company pays tens of thousands of dollars continually in Google ads to recruit new investors. This, on top of the up to 17% cost of capital.3. Concealed Involvement of Barred Individual: Ron Fossum is barred by the SEC for a similar, $20-million-dollar financial fraud and his involvement in Norada Capital Management is concealed.4. Debunked Claims of Retail Success: Public records thoroughly debunk the fiction of purchasing failed national chains and turning them into online success stories.5. Questionable Returns in New Ventures: Santarelli's involvement in Themed STR Capital Fund which, according to the video released by his partner, Josh Luttrell, offers returns that defy logic.6. Desperation to Raise Funds: The company’s desperation to raise new funds from investors is evident in their offering of a 2% bonus until late August 2024, pushing already untenable, fixed returns to 17%.7. False Sense of Security: The imputed credibility touted by Santarelli from his 2004 founding of Norada Real Estate Investments, which does not raise money, but has a functional and, to his credit, impressive website. This and his top 50 podcast, “Passive Investing in Real Estate”, ( Link ), gives investors a false sense of security.8. Covid-19 Relief Fraud: Fossum’s $300-million-dollar apparent Covid-19 scheme raises significant concerns and should be investigated. 9. Use of Public Testimonies: Norada Capital Management uses past, satisfied investors, not audited financials or any evidence that corroborates their business model is a tactic used by all of us who sadly were running Ponzi schemes.10. Ongoing Fraudulent Practices: The cumulative impact of a blatantly fraudulent business model, the long 12-year run, the concealed involvement of a barred CFO, a new Florida venture also in “money-raising mode,” and aggressive advertising make this company a financial fraud superpower.11. Inadequate Regulatory Filings: The last Norada Capital Management Reg D filing was in November 2020, with no subsequent filings despite continued efforts to raise funds, indicating potential regulatory noncompliance. 12. Undisclosed CFO Role: The intentional omission of Mr. Fossum’s role as CFO on professional profiles, and company materials due to his SEC bar highlights deliberate attempt to mislead investors.
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