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Case Study
Norada Capital Management Fraud Report
Fraud Type
Department of Homeland Security
Amount Recovered
$2.3M
Date
June 10, 2024
Address
7355 Woodland Drive, Suite 200
01 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.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.
02 Norada Capital Management
30251 Golden Lantern # E-261 Laguna Niguel, CA – 92677-5993
Professional 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 (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,”
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.
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,”
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,”
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.
03 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 of Marco 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.
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.
04 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 Dressbarn website, “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 Dressbarn to relaunch the brand online.”
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 owning Bodybuilding.com, a July 1, 2022 official press release from Bodybuilding.com states that:
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.
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