I didn't say they were illegal, I said there was a regulatory burden and prohibition: "If, however, not all of the investors are accredited, founders will need

I didn't say they were illegal, I said there was a regulatory burden and prohibition: "If, however, not all of the investors are accredited, founders will need to provide a lot more disclosure to the investors, including a full-blown private placement memorandum, risk factors and financial statements. Also, note that all non-accredited investors in a Rule 506 offering must be sophisticated, which means that the company must reasonably believe that non-accredited investors (either alone or together with their investment representatives) have sufficient financial and business knowledge to allow them to evaluate the risks and merits of an investment." Its prohibited to take investments from non-accreddited investors in the straightforward manner you can from accredited investors, and if you do, you have a greater burden, and additional risk to bear.