The 56-year-old founder of a private equity fund was charged Tuesday with defrauding hundreds of investors out of approximately $6.5 million through unsecured promissory notes over a four-year period.
Mario Giovanni Santarelli of Laguna Niguel solicited hundreds of investors nationwide between June 2020 and June 2024 to invest between $25,000 and $500,000 in unsecured promissory notes, claiming the funds would support real estate projects, Broadway shows and cryptocurrency ventures, according to the U.S. Attorney’s Office for the Central District of California.
Santarelli promised monthly high-yield interest rates of approximately 12% to 15% over a seven-year period, allegedly using webinars to assure investors that the promissory notes were backed by diversified assets under management, offered steady, predictable monthly returns, and that Norada Capital Management was a “hands-off, passive investment” ideal for retirement funds, according to the affidavit in the case.
Santarelli also provided balance sheets to investors listing the status of the assets, liabilities, and equity of his Laguna Niguel-based private equity fund to the note holders, which listed the total asset value between $143.3 million and $224 million, according to the affidavit.
However, Norada Capital Management did not pay the promised returns and interest payments, prosecutors said. The funds were instead invested in risky assets that offered no security, generated unprofitable returns, and resulted in substantial debt.
“The balance sheets sent to investors hid more than $90 million in debt and included inflated assets. In Ponzi-scheme fashion, Santarelli made interest payments to investors using other investors’ money,” according to the affidavit.
Santarelli allegedly caused losses of approximately $6.5 million to more than 500 investors.
Santarelli was charged with a single count of wire fraud. He is scheduled to appear at the U.S. District Court in Santa Ana on Oct. 20, according to the Department of Justice.
If convicted of the charge, Santarelli faces a statutory maximum sentence of 20 years in federal prison.
The FBI has seized more than $5 million in proceeds connected to the alleged scheme and are continuing to investigate additional assets, according to prosecutors.
The FBI and Homeland Security Investigations are assisting the U.S. Securities and Exchange Commission in the case.