Two Oregon investors have filed a civil complaint in federal court alleging that Norada Capital Management and related entities sold promissory notes that concealed a Ponzi scheme. Matthew and Shelley Ross lodged the complaint on June 18, 2026, in the U.S. District Court for the Central District of California, naming Norada Capital Management LLC, several affiliated companies, Marco Santarelli, Ronald Fossum Jr., and Michael Johnson as defendants.
According to the filing, Norada Capital issued promissory notes from July 2021 through at least June 2024, promising annual returns of 12% to 17% and, in some cases, a 5% bonus payment. Marketing materials touted “predictable” income and “monthly passive income,” assuring investors they would not need to chase unpredictable stock-market returns. The Rosses allege they invested $250,000 across three notes.
The complaint asserts that the promised returns were not supported by legitimate cash flow. Instead, it characterizes the operation as “a classic Ponzi scheme,” alleging that money from new note investors was used to make monthly interest payments to earlier note investors. The scheme allegedly collapsed when Norada Capital stopped making required payments to the Rosses in June 2024.
The filing also highlights the background of key individuals. Santarelli, described as a licensed California real estate broker, allegedly failed to disclose prior bankruptcy filings and cease-and-desist orders issued in Pennsylvania in 2011 and California in 2012. The complaint further alleges that Norada Capital’s investor deck identified Fossum as the company’s chief financial officer, despite the SEC having previously barred him from associating with brokers, dealers, or investment advisers and from participating in securities offerings except for his own account.
Due to Fossum’s status, the complaint argues that Norada Capital could not rely on its claimed Regulation D exemption, as Fossum was a “bad actor” under securities rules. It also alleges that Santarelli signed Norada Capital’s Form D while falsely certifying that no disqualifications applied. This raises due-diligence issues that advisors should consider when evaluating private offerings, including undisclosed regulatory history and the role of individuals subject to securities bars. For more on related regulatory challenges, see FINRA Panel Orders Arkadios Capital to Pay $2.7M Over Advisor's Father's Ponzi Scheme.
After payments stopped, Santarelli allegedly emailed investors on June 20, 2024, stating that distributions would be suspended due to “current market conditions and unforeseen financial challenges.” The same email reportedly said Norada would convert the notes into equity. The complaint alleges that the equity was “virtually worthless,” leaving 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. The case underscores the importance of thorough due diligence, especially when offerings involve individuals with regulatory histories. As noted in Affluent Investors Cut Alts Targets as Risk Awareness Rises, Escalent Survey Shows, risk awareness is increasingly top of mind for investors.
The allegations are from a civil complaint and have not been proven. The uploaded court document does not include any response from the defendants or any ruling on the merits. Advisors should remain vigilant about the potential for undisclosed conflicts and regulatory red flags in private placements.
