SEC Charges California Man in Fraudulent Multi-Million-Dollar Investment Scheme

The U.S. Securities and Exchange Commission recently charged Marco G. Santarelli, a resident of Laguna Niguel, Calif., for running a multi-million-dollar investment scheme that defrauded hundreds of investors nationwide.

The SEC’s complaint, filed in the United States District Court for the Central District of California, alleges that, from at least June 2020 to June 2024, Santarelli, through his company Norada Capital Management LLC, raised tens of millions of dollars through the sale of unsecured, high-yield promissory notes that Santarelli falsely described as having “strong capital preservation potential.”

The Norada promissory notes offered rates of return that varied based upon the amount invested and fluctuated from year-to-year, ranging from 12% to 14% for investments of less than $100,000, up to 15% to 17% with a 5% bonus at maturity for investments in excess of $200,000. The high rates of return were a key selling point for many of Norada’s investors.

Although Norada employed a few salespeople to market the notes to investors, according to the SEC, Santarelli solely ran the company. He created and disseminated Norada’s marketing materials including weekly webinars he posted online; he communicated with investors and prospective investors; and he controlled the company’s bank accounts.

Santarelli represented that the Norada notes were backed up by “hard assets and collateral” and therefore less risky than other speculative investments. He also pitched Norada as “IRA friendly” to investors, providing “investors with a way to put to use their self-directed traditional IRA or Roth IRA.” In reality, Norada invested in assets that didn’t meet these objectives.

For example, in 2020, Norada’s portfolio included intellectual property assets of several retailers, which had been purchased out of bankruptcy, musical productions, approximately $5 million dollars of crypto assets held in an account at Coinbase opened in Santarelli’s name and not in the name of Norada, and $1 million in real estate-related assets.

According to the complaint, Norada’s investments were volatile and speculative, and by August 2023, the SEC alleges that Santarelli and Norada could no longer satisfy the returns they had promised to investors, and began making Ponzi-like payments in which investor returns were paid using funds obtained from new investors. In total, Norada used more than $18 million of investor funds to make Ponzi-like payments to its investors. Santarelli never disclosed these Ponzi-like payments to investors. In fact, after Norada began using investor funds to pay investor returns, in August 2023, Santarelli started offering investors even higher rates of return on their investment. Specifically, he offered investors a 5% bonus on top of their already promised rates of return. This allowed Norada to raise an additional $10.4 million from investors that month alone, and an additional $43 million over the next 10 months.

The SEC alleges that in June 2024, Santarelli notified investors that Norada was suspending distribution payments to investors. It ceased operations by early 2025.

Santarelli, without denying the allegations contained in the SEC’s complaint, consented to the entry of a final judgment permanently enjoining him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the antifraud and registration provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, imposing a conduct-based injunction, and ordering him to pay a penalty, disgorgement, and prejudgment interest with amounts to be determined upon motion of the SEC. In a parallel action, Santarelli pled guilty to criminal charges.

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