The people who lost money to Lubbock-based Ferrum Capital don’t expect to get all their money back, but work continues to recover some funds.
People who made about $4 million at the front end of Ferrum’s “Ponzi scheme” have the chance to repay half or defend themselves in court. Some have agreed to pay.
Two companies that pocketed millions (according to various lawsuits) are being targeted through multiple legal means to recover more for the victims.
“What our hope is – is that some of these criminal proceedings will help us to unlock more funds. And put in a more blunt way, the Department of Justice has greater coercion tools in their toolkit than we do. Spending many years in an eight-by-eight cell can be a much stronger form of persuasion than ‘I’ll sue you,’” said Matthew King, a San Antonio-based attorney working on one of the lawsuits.
How we got here
A San Antonio judge seized control of Ferrum from its founders – Joshua Allen and Michael Cox, both of Lubbock – in January 2024. Allen and Cox are both under federal indictment for securities fraud and other charges. They’re scheduled for trial in August.
Their co-defendant, Brooklynn Chandler Willy of San Antonio, accepted a plea deal last week (which LubbockLights.com covered here). Her sentencing is scheduled for September.
“Allen, Cox, and Willy used Ferrum Capital, Ferrum II, Ferrum III, and Ferrum IV (collectively “Ferrum Entities”) to steal millions of dollars from hundreds of victims. … Most investors lost some or all of their investment into the Ferrum Entities,” the federal indictment against them said.
The criminal case said Ferrum took $67 million from people.
Going after the ‘winners’
The people who made money on Ferrum were recently sued – by Ferrum.
Ferrum is under the control of receiver John Patrick Lowe in San Antonio and it sued 65 of its former investors (64 persons and one trust) under the Texas Uniform Fraudulent Transfer Act.
“The total amount in dollars of the net winners that we sued was a little over $4 million,” said Lowe’s attorney, Royal Lea.
Various lawsuits, including the one filed by Lowe, claimed Ferrum recruited new investors to pay back previous investors. Lowe’s lawsuit also claimed the early investors were making money from subsequent victims – not legitimate business activity.
“While most of the people who invested in Ferrum promissory notes lost their entire investment, a few of them … actually recovered all of the principal they invested plus interest or gain on their principal investment,” Lea said.
As of last week, 16 of the 65 agreed to settle out of court, according to court records.
“The receiver offered all of the net winners the opportunity to settle by paying 50 percent – or one half of their net win – if they settled and paid promptly. A number of them have already taken advantage of that opportunity,” Lea said.
Lea estimated Lowe’s lawsuit recovered roughly $400,000 so far from the settlements.
That money will help offset the hundreds of people who lost money with Ferrum – in some cases their entire life savings.
“Defendants are what the law often refers to as ‘net winners’ from the Ferrum promissory note Ponzi scheme. Defendants received more money from Ferrum Capital than the principal amount they invested in Ferrum Capital or one of the other Ferrum entities. Each defendant’s net winnings … was a fraudulent transfer …,” Lowe’s lawsuit said.
Recovering ‘junk debt’ too
Lowe’s lawsuit claimed much of the Ferrum money went to Austin-based Collins Asset Group (CAG), which filed for bankruptcy in the middle of last year.
The arrangement was “destined to fail and it did fail.”
“CAG was a junk debt portfolio buyer that received the bulk of the proceeds of the Ferrum Capital Ponzi scheme. CAG was a second level of fraud on the retail investors who invested in Ferrum Capital promissory notes,” the lawsuit said.
Recent bankruptcy documents indicated CAG had been collecting debts and owned a debt portfolio which could be auctioned off. The highest bidder was Meadow River Investments at $5.2 million. The deal still needs approval by a bankruptcy judge in San Antonio, which might come as soon as Monday (3/23/2026).
Lea said, “There’ll be cost and deductions from that. The sale price was sort of based on the value of the portfolio in October of last year.”
Some of the debt portfolio was collected since then and the sale price will be reduced to offset those recent collections.
Lowe’s lawsuit gave an update on the recovery efforts for the victims.
It said, “The Ferrum Capital insiders took approximately $13.6 million for themselves and delivered about $47.6 million to CAG. CAG returned only about $18 million to Ferrum voluntarily before it stopped paying Ferrum Capital. The receiver has recovered approximately an additional $2 million from CAG in litigation and in a bankruptcy proceeding CAG filed.”
Another $5 million will come from CAG’s debt portfolio (if the bankruptcy judge agrees). Another $900,000 was recovered recently from Willy. Lowe had located another $800,000 in the most recent quarterly report. The next report is expected in early April.
Other companies including CAG’s parent company, Oliphant, are also being sued by Ferrum’s victims in multiple lawsuits.
Related
Related posts