Broken Promissory: Feds shut down Norada, Yield Wealth, and Next Level Holdings, but the Real Story is Reg D Real Estate

Points of similarity are critical because they reveal patterns that turn what looks like an isolated fraud into a repeatable playbook - the same lies, the same targeted guarantees, the same concealments, the same fake documentation - just with new names, new victims, and new advertising channels. Now, the constant theme in all the cases I have submitted to law enforcement is perpetrators of financial fraud lie about what they owe, earn and own.

Exhibit I Norada Wealth Management

Norada Wealth Management was a Reg D promissory loan note scheme I submitted to authorities in June 2024 (for a copy of my sumission, please see https://app.box.com/s/nvh9zl6y1omxixo7oeif8vfdlpl7cv5p). The company supposedly generated 12 to 15% annual returns through real estate, Broadway shows, and cryptocurrency. But it is how the fraud thrived that is worth learning from. According to the government, CEO Marco Santarelli provided balance sheets to investors listing the status of the assets, liabilities, and equity of Norada Capital Management to the note holders, which listed the total asset value between $143.3 million and $224 million when the truth was he was $90M in debt. Like Mr. Santarelli, syndicators of Reg multifamily and self-storage regularly distort their true financial condition. Investors are kept in the dark about future advance loan covenants that over encumber assets by tens of millions or, just as detrimental to equity, they cross collateralize assets from one fund to the next--anything to get that next funded and keep the scheme going. But perhaps the best "Norada like" example (since the issuance of audited financials are not a tightly held value amongst Reg D operators), is the promoters' social media ads and official company websites that list properties and make AUM claims sometimes exceeding $1B for all to see while never mentioning to investors who rely on such claims of financial stability that those very assets themselves, portfolio wide, exceed 100% LTV.

Exhibit II Yield Wealth Management and Next Level Holdings

In April 2024 I wrote the FDIC and copied certain regulators on the dangers of Yield Wealth Management. Having first hand experience with Zera Financial (SEC LA office), and where in that case the FDIC acted proactively and probably saved investors millions, for whatever reason they ignored this email (please see page 13 at https://app.box.com/s/fjek20imixr581ama5au5glmir0stp56). According to the government, "Yield marketing materials described the company as "revolutionizing the banking industry with Enhanced Term Deposits, offering yields up to 10.5% APY and security through insurance coverage up to $10 million."

The report I submitted focused on the points of similarity between Yield Wealth Management and Allen Stanford and his billions in fake CDs supposedly backed by a bank in Aruba; the 5 to 10 year lock up for investors and that normally and regularly banks cannot afford to pay depositors what Yield was offering investors in their "accounts." In the end, the damage was monumental: "Paul Regan allegedly defrauded over 300 investors of more than $60 million through false promises of protected investments and guaranteed returns while using these deposits to quietly repay other entities." As for the FDIC ignoring my warning, the Department of Justice included an August 2024 WSJ article written about Paul Regan in their official press release on this case so here is the brief backstory on that sequence of events. I cooperated with the WSJ and turned over all my findings but immediately disclosed to the agent that I worked with on the matter who was beyond angry with my decision to leak to the media my reports on Yield and Next Level. I tried to defend myself by stating that I was very honest with him about my deceitful leaking, which he found no humor in. But I did ask him to, with equal zeal, to call the FDIC and be just as angry at them for ignoring the warning email.

But don't miss the points of similarity which made it all possible. The fraud was only made possible by the implementation of "false and misleading statements where from at least 2022 through December 2024, REGAN and a team of salesmen and associates defrauded hundreds of retail investors by offering investment products through two entities, Next Level and Yield, based on false and misleading statements." How are Paul Regan's false and misleading statements any different from:

DLP Capital Partners: "When lots of other companies are struggling, we've grown our organization by 66% or more per year 16 straight years."Donald Wenner, Founder, CEO); or...

Dutch Mendenhall's when he pledged the same collateral twice or had numerous "20% every six months," loan notes with multiple investors that never made it into the financial statements or...

Ashcroft Capital when offering documents stated a purchase price of $97M but in really the real purchase price was $84,930,000, and the loan on the property contained an equity destroying future advance loan covenant, provided by a bank that knew full well Ashcroft was a Reg D syndicator raising money from investors to make the down payment, and that by providing that type of mortgage the end result was the skyrocketing of the LTV to a potential, perhaps actual (irrelevant, the lender knew the provision doomed investors) of 134%; or...
Spartan Investment Group's $64M debt fund supposedly secured by their already hopelessly over encumbered self-storage portfolio or....

what did Bam Capital do with the $80M raised from investors from Fund III when they already owned three of the five assets in the fund and all but one of those apartment buildings are over encumbered?
In other words, the government is now faced with an unenviable dilemma. In the world of proactive fraud uncovering, it isn't everyday that 3 cases get shut down in one week but it's a hollow accomplishment when the SEC fails to act on just as severe or worse Reg D apparent financial frauds in the multifamily and self-storage sectors. Not long ago, the SEC may have been content with waiting for these syndicators to simply implode--thereby avoiding confrontation with Big Law that represents the likes of Ashcroft Capital and DLP Capital Partners et al whereby such a reactive approach results in investors losing everything.

But that was before the abrupt appearance of numerous government backed future advance loans hiding in mortgages like time bombs that lenders, just like in the 2008 financial crisis, appear to have conspired with syndicators to conceal debt in the form of future advance loans that are so off balance sheet, not even a title search reveals them. Now with the apparent lender complicity confirmed by notarized loan documents, the SEC's "no action" plot thickens as not even they can ignore points of similarity in their own cases from this week and now with the involvement of certain banks and lenders.

The report I submitted on Next Level Holdings can be found here (https://app.box.com/s/4oa6gcsryafjffp03s9eur96j66r6t34).

Much like Yield, Next Level Holdings "told investors who purchased Next Level Notes were guaranteed to receive double-digit returns, with no risk of loss, through Next Level's precious-metals business." Just as with some Reg D offerings that tell investors their funds are collateralized through the equity in the newly formed LLC where the asset will be owned and to which will provide collateral for their investment (omitting the presence of the equity removing future advance loan or other debt soon to be appled) Next Level Holdings told investors an insurance company back their principal investment and created the phony insurance documentation to prove it. Those insurance companies, like investor equity don't exist. And, of course what would be financial fraud in the era of social media without all three above mentioned schemes, (Norada, Next Level and Yield) relying upon social media ads to induce investors, something Reg D promoters have perfected.

Conclusion

Three frauds shut down in one week may sound like victory, but until regulators apply the same scrutiny to Reg D multifamily and self-storage syndications - where the lies about what is owed, earned, and owned are just as brazen - investors will keep getting blindsided by the next Norada, the next Yield, and the next Next Level.

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This release was published on openPR.