2 Texas financial advisers found guilty in $80 million Ponzi scheme

SAN ANTONIO – Two Lubbock financial advisers have been found guilty of running a massive Ponzi scheme that federal officials say took in about $80 million from investors, leaving roughly 500 victims with millions of dollars in losses.

A jury found Michael Cox and Joshua Allen guilty on all charges Tuesday following a trial that lasted more than a week. Federal officials said at least half of the victims were from the San Antonio area.

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U.S. Attorney Justin Simmons said Allen owned Allen Financial Agency in Lubbock, where Cox served as senior vice president. Beginning in 2017, the two set up several investment funds under the Fareham name.

Simmons said investors were told the funds used different strategies to make money, but in reality, money coming in from new investors was used to pay earlier investors.

These funds claimed to use different investment strategies, but ultimately all had the same goal: to line the pockets of Michael Cox and Joshua Allen,” Simmons said. “In reality, these funds were a giant Ponzi scheme, where funds invested by later investors were used to pay off earlier investors.

Federal officials said Allen and Cox lied about the investments, how much they would make from them and what was backing the investments.

They told various lies to their victims to secure these investments,” Simmons said. “They lied about the nature of the investments themselves. They lied about the commissions they would make. They lied about the collateral that secured the investments, which was especially egregious because it made these investments sound safe.

Officials say the two also used their faith and standing in the community to gain the trust of investors.

“One of the most disgusting aspects of this case and the lies that they told was how they utilized their faith and their reputation in their community to con their investors,” Simmons said. “In reality, they prowled around like roaring lions, seeking those who they would devour, using various spiritual themes to develop trust with their victims.”

At one point, Simmons said, Allen tried to reassure an investor by invoking his faith.

“At one point, Allen told one of his victims, ‘It would take Jesus himself coming back for this to be a risky investment,'” Simmons said. “In reality, this was the riskiest of investments.”

Federal officials estimate about $80 million was invested in the scheme, with at least $50 million lost. They say Allen and Cox pocketed an estimated $9.2 million.

“In total, around $80 million was raised from investors, and conservatively, $50 million was lost across 500 victims,” Simmons said. “Another conservative estimate is that $9.2 million went into the pockets of the defendants in this case.”

Investigators said some victims lost their life savings. Others put money into the investments while dealing with medical problems or financial hardship.

We heard the testimonies of decades of friendships and generations of friends being forever ruined,” IRS Criminal Investigation Assistant Special Agent in Charge Troy Caldron said. “There are those that lost their life savings, those who bought into the scheme looking for hope in the face of medical ailments and financial despair.

One of those victims was a San Antonio man who invested $500,000 — essentially his life savings — while waiting for a kidney transplant. Prosecutor Joe Blackwell said the man told Cox he needed the money for the transplant and wanted it kept somewhere safe.

“That money was immediately stolen, immediately stolen by the defendants, sent to an earlier investor, and then they also took some of the money for themselves,” Blackwell said.

Blackwell said the man was ultimately unable to get the medical care he needed.

“I do not believe he got his kidney transplant,” Blackwell said. “And obviously, I can say from this victim, having spoken with this victim, his health has suffered significantly because of the actions that the defendants took.”

Blackwell said the case shows the losses went far beyond dollars and cents.

Money is not just money. It’s your life. It’s your future. It’s your grandkids’ future. It’s your retirement. It’s your health at times,” Blackwell said. “And for this victim, it was his health that they stole from him.

The San Antonio connection to the scheme came largely through Brooklynn Chandler Willy, a San Antonio financial adviser who was also charged in the case and previously pleaded guilty. Blackwell said Willy was known locally through television and radio programs and brought many of the investors into the scheme.

“Many of the victims were San Antonio-based victims,” Blackwell said. “In fact, I would say over half of the victims came from the San Antonio area and region, as brought in by Brooklynn Chandler Willie.”

FBI Assistant Special Agent in Charge Alex Doran said the case was particularly devastating because many victims were dealing with people they already knew and trusted.

This case boils down to two things: it’s about trust and greed,” Doran said. “We often talk about how to protect yourself and your loved ones from online fraud schemes from individuals you’ve never met, most likely located overseas. But these individuals were taken advantage of and betrayed by those they knew and thought they could trust.

The jury deliberated for only a few hours before finding Allen and Cox guilty.

Both men were taken into custody after the verdict and are expected to be sentenced in the coming months. Federal officials said they will also continue trying to recover money for the roughly 500 victims.

“We always go after the money and try to recover it,” Simmons said. “What kind of money they’ll actually have to pay those is unknown, but we will pursue that as long as it takes.”