I have formed an LLC for investment purposes. I would like to have a few of my family members (5) participate in the investment but without becoming members of the LLC (for a variety of reasons). I would receive all of their monies and this total would be reflected as my member interest in the LLC. Then at the end of the investment period 1-2 years, I would need to distribute the monies back.
What is an effective method for them to invest through my role as an LLC member/manager ?
A nominee designation? What paperwork is involved ?
A loan structure ?

What are the tax issues involved ?

Have you considered a separate LLC to be formed as an investment company, which would then be paid back at a varible interest depending on activity of the original LLC.