The prosecution’s first day of witnesses in the Joshua Allen and Michael Cox Ferrum Capital trial showed a lot of financial documents – explained by an IRS special agent and the first of a long line of people who lost money.
Those documents, prosecutors said, show how money came into Ferrum, was used to pay previous investors and then taken by Allen, Cox. It also went to Brooklynn Chandler Willy, their San Antonio affiliate.
Defense attorneys who cross-examined the witnesses, questioned parts of testimony, hoping to lay seeds of doubt with jurors and even offered the idea Ferrum itself was defrauded.
Action between defense attorneys and witnesses got a bit tense at times, with witness Cody Herndon asking Allen’s attorney, Eddie Mendoza, “Is this the gotcha moment?”
IRS special agent explains investigation
Rebecca Jones investigated Ferrum along with the FBI and the Texas State Securities Board.
She outlined for Joseph Blackwell, assistant United States attorney, how they looked at bank accounts, self-directed IRAs, Ferrum records, other records and interviews with more than 100 witnesses.
They looked at Ferrum Capital, Ferrum II and Ferrum IV, which dealt with European bonds.
Ferrum Capital dealt with the Collins Asset Group (CAG), which bought defaulted loans. Prosecutors showed Ferrum brought in more than $67 million, but $47 million was sent to CAG.
People invested in more than one Ferrum entity, she said, adding there was also a “significant comingling of funds between the entities.”
Blackwell asked if there were wire transfers outside of Texas and Jones said there from Wisconsin, Florida, New Mexico and Louisiana.
He asked if Willy was a major source of investors for Ferrum, and Jones said yes.
They showed affiliate agreements between Willy and Ferrum, signed by both defendants.
Then they outlined what the prosecution called Ferrum IV versions 1.0 and 2.0.
Ferrum IV 1.0 had 23 investors with one-year notes. They brought in nearly $4 million and paid out $4.46 million.
But Ferrum IV version 2.0 brought $8.8 million and paid out more than $1.7 million – a loss of more than $7 million.
Then they said more than $3.6 million went to Allen, Willy and Cox:
Allen: $2,298,660.
Willy: $1,060,044
Cox: $258,000.
“How did 1.0 get repaid?” Blackwell asked.
“From 2.0 investors,” Jones said.
There was also Ferrum III, which dealt with life insurance.
“Do we see money from Ferrum Capital, Ferrum II and Ferrum IV flowing to Ferrum III to cover premiums?” Blackwell asked, and Jones said yes.
“Were they aware their money was used for that?” he asked, and Jones said no.
Allen’s attorney Anthony Box objected – saying Blackwell was asking leading questions and Judge Fred Biery sustained Box’s objection.
Read our series on Ferrum
LubbockLights.com covered Ferrum for more than two years.
Click here to see our series of stories.
August 10, 2026
August 7, 2026
August 6, 2026
Willy sentencing delayed – part of Ferrum Capital criminal case
August 3, 2026
July 30, 2026
July 21, 2026
Judge denies Allen’s request to push back criminal trial set for August 10
July 2, 2026
No plea deal and none expected in Ferrum case as Allen seeks delay and prosecutors balk
June 19, 2026
June 12, 2026
Ferrum Capital investors have until September 3 to file a claim — here’s how
June 4, 2026
June 1, 2026
Collection efforts against Joshua Allen in Walk-On’s case successfully completed
May 15, 2026
May 13, 2026
Ferrum victims may have one place to file claims if judge approves at May 19 court hearing
April 28, 2026
April 15, 2026
April 13, 2026
March 23, 2026
March 19, 2026
Feds update charges against Willy in Lubbock-based Ferrum Capital case, could take her assets
March 4, 2026
February 4, 2026
Josh Allen may lose companies as one impact from receivers working on Walk-On’s, Ferrum cases
November 25, 2025
November 21, 2025
November 7, 2025
October 8, 2025
Ferrum criminal trial – Allen, Cox and Willy – pushed back until next year
September 5, 2025
Ferrum detour to Delaware ends; what that means for victims in Lubbock, San Antonio
July 29, 2025
July 24, 2025
July 16, 2025
‘Finally … in shackles’ – Ferrum victims ‘ecstatic’ about criminal charges against Allen and Cox
July 10, 2025
July 9, 2025
Blackwell and Jones went through a long series of documents showing how a bank account had a low number, money from people came in and it went out to pay other investors or was taken by the defendants.
They showed notes from Mike Cox accompanying checks to investors on the European bonds thanking them for their patience in getting the money to them and apologizing for the delay. In one note, he wrote “COVID in Europe set us back.”
Then they shifted to discussing Willy, who got into trouble with the Texas State Securities Board, limiting what she could do. She had to show her bank accounts, demonstrating she complied.
Jones showed money going to Cold Moon Holdings, owned by Paula Vaecek. Then the money was sent to Willy.
During cross-examination, Box asked why the IRS didn’t ask for help from the United States government offices in London, the connection to the European bonds.
“The money was gone,” Jones said.
Box pointed out the FBI London office is one of the biggest in entire bureau.
When Jones outlined where Allen received money, she listed eight companies he owned. Then Box asked if Josh owned a Lubbock company called WGP SPV LLC. If not, it throws off the whole schedule, he said.
“I’d have to look at the records,” she said.
He disputed another payment to Allen saying it would lower the number prosecutors say he made.
Then he talked about Allen’s signature on documents and how Cold Moon Holdings was set up by other people.
“Isn’t it true they utilized Ferrum without Ferrum’s knowledge?” he asked.
“Not to my knowledge,” Jones said.
That’s when Box said individuals committed fraud on Ferrum, causing Blackwell to stand and object, saying Box was making hypothetical comments not based on facts in the case. The judge sustained Blackwell’s objection.
Box went on to claim Ferrum documents were edited, driving his point that “Ferrum was also frauded.”
Blackwell then shot back on redirect about who owned WGP SVP LLC, showing Josh Allen signing documents showing his involvement with the company with William Pickart at the address used by Allen Financial Services and Ferrum Capital.
Cody Herndon: Once Allen’s best friend
Herndon took the stand in the afternoon as the prosecution’s first witness who lost money.
He testified meeting Allen at Texas Tech, where they were both in a Christian fraternity called Farmhouse, were roommates, in each other’s weddings – Allen even officiated at the funeral for Herndon’s grandmother.
“We were the best of friends for many years,” he said.
Herndon called Allen his financial and spiritual advisor.
When Herndon was leaving a corporate job, he said Allen asked about his 401K and rolling it over to a Provident Trust IRA, a four-year product with 10 percent interest.
Over time, Herndon invested $275,000 with Allen.
Blackwell produced documents showing his money was funneled into Ferrum entities and had his signature. But Blackwell asked if he signed it.
“It could be my signature, but it’s a little different,” he said, not recalling he signed it.
“Was Ferrum ever discussed with you or (Allen’s) ownership?” Blackwell asked. Herndon said no.
Blackwell showed texts between Allen and Herndon, mostly friendly texts between longtime friends that included investment communication.
Eventually, Herndon got a bankruptcy notice about Michael Cox. He texted Allen who said, “Mike Cox was in my office until a year ago.”
Herndon got another letter and texted Allen saying things were “not looking good” and asking where the money was.
Allen texted back he was “working on it.”
Herndon asked if his money was still there and safe.
Eddie Mendoza, one of three attorneys representing Allen, then cross examined Herndon.
He outlined Herndon has substantial business experience and asked if he had experience working with contracts.
“You’ve read hundreds,” Mendoza said.
Mendoza pointed out Herndon’s account is self-directed and he’s responsible for it.
Mendoza challenged Herndon’s comments he didn’t know about Ferrum, Allen’s ownership of CAG because it was in documents Herndon signed.
“This is the gotcha moment? Are we going to arrive at a point here?” Herndon said.
Given Herndon’s business experience he should have researched more, Mendoza said.
“A lack of research doesn’t mean they were not disclosed to you,” he said, pointing out part of a document saying, “no payments to lender shall be paid by Ferrum Capital unless Ferrum received from the borrower.”
Mendoza then said Herndon signed three times.
“It’s what you do when you trust your best friend,” Herndon responded, adding “I don’t agree with the way you’re twisting things.”
Mendoza wrapped up talking about the investment had a high degree of risk and as an executive, Herndon should know that and it was disclosed.
Georgia attorney who dealt with CAG
Jason Doss represented people who sued CAG in a class-action suit in 2020. Collins paid $15.8 million out-of-court but denied wrongdoing.
Doss also said Collins tried to kill the lawsuit through a New York filing and Ferrum was in favor of that.
“Which I thought was odd,” he said.
During cross examination, Box pointed out that Doss made $3 million-plus on the CAG suit – coming out to $3,200 an hour.
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