Investors accuse Norada Capital of hiding note risks

Two Oregon investors say Norada Capital Management sold them promissory notes that hid a Ponzi scheme. 

Matthew and Shelley Ross filed the complaint on June 18, 2026, in federal court in the Central District of California. The complaint names Norada Capital Management LLC, several related Norada entities, Marco Santarelli, Ronald Fossum Jr. and Michael Johnson as defendants. 

According to the complaint, Norada Capital issued promissory notes from at least July 2021 through at least June 2024. The notes allegedly promised annual returns of 12% to 17% and, in some cases, a 5% bonus payment. Marketing materials allegedly promoted “predictable” income and “monthly passive income,” and said investors would not have to chase unpredictable stock-market returns. 

The Rosses allege they invested $250,000 through three notes. Their complaint says the returns were not supported by legitimate cash flow. It calls the alleged operation “a classic Ponzi scheme” and says money from new note investors was used to make monthly interest payments to earlier note investors. 

The complaint also alleges that Santarelli, described in the filing as a licensed California real estate broker, failed to disclose prior bankruptcy filings and prior cease-and-desist orders issued in Pennsylvania in 2011 and California in 2012. 

The filing also focuses on Fossum. The complaint alleges that Norada Capital’s investor deck identified Fossum as the company’s chief financial officer. It says the SEC had previously barred Fossum from associating with brokers, dealers or investment advisers, and from participating in securities offerings except for his own account. 

The complaint alleges Fossum’s status made him a “bad actor” under securities rules and made Norada Capital unable to rely on its claimed Regulation D exemption. It also alleges Santarelli signed Norada Capital’s Form D while falsely certifying that no disqualifications applied. 

The complaint says Norada Capital stopped making required note payments to the Rosses in June 2024. It says Santarelli then emailed investors on June 20, 2024, stating that distributions would be suspended because of “current market conditions and unforeseen financial challenges.” The same email allegedly said Norada would convert the notes into equity. 

The complaint alleges that the equity was “virtually worthless” and that the conversion left investors with illiquid membership interests instead of the promised note payments. 

The filing further states that Santarelli was charged by federal prosecutors with one count of wire fraud in September 2025, pleaded guilty in October 2025 and is scheduled for sentencing in August 2026. 

For advisors, the complaint highlights due-diligence issues that can arise in private offerings, including undisclosed regulatory history, prior bankruptcies, claimed registration exemptions and the role of individuals subject to securities bars. 

The allegations are from a civil complaint and have not been proven in this case. The uploaded court document does not include any response from the defendants or any ruling on the merits.