\u201cAllen, Cox, and Willy used Ferrum Capital, Ferrum II, Ferrum III, and Ferrum IV (collectively \u201cFerrum Entities\u201d) to steal millions of dollars from hundreds of victims. \u2026 Most investors lost some or all of their investment into the Ferrum Entities,\u201d the federal indictment against them said. <\/p>\n
The criminal case said Ferrum took $67 million from people. <\/p>\n
Going after the \u2018winners\u2019 <\/p>\n
The people who made money on Ferrum were recently sued \u2013 by Ferrum. <\/p>\n
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. <\/p>\n
\u201cThe total amount in dollars of the net winners that we sued was a little over $4 million,\u201d said Lowe\u2019s attorney, Royal Lea. <\/p>\n
Various lawsuits, including the one filed by Lowe,\u00a0claimed Ferrum recruited new investors to pay back\u00a0previous\u00a0investors.\u00a0Lowe\u2019s lawsuit\u00a0also claimed\u00a0the early investors were making money from\u00a0subsequent\u00a0victims \u2013 not legitimate business activity.\u00a0\u00a0<\/p>\n
\u201cWhile most of the people who invested in Ferrum promissory notes lost their entire investment, a few of them \u2026 actually recovered all of the principal they invested plus interest or gain on their principal investment,\u201d Lea said.\u00a0\u00a0<\/p>\n
As of last week, 16 of the 65 agreed to settle out of court, according to court records. <\/p>\n
\u201cThe receiver offered all of the net winners the opportunity to settle by paying 50 percent \u2013 or one half of their net win \u2013 if they settled and paid promptly. A number of them have already taken advantage of that opportunity,\u201d Lea said. <\/p>\n
Lea estimated Lowe\u2019s lawsuit recovered roughly $400,000 so far from the settlements. <\/p>\n
That money\u00a0will help offset the hundreds of people who lost money with Ferrum \u2013 in some cases their entire life savings.\u00a0\u00a0<\/p>\n
\u201cDefendants are what the law often refers to as \u2018net winners\u2019 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\u2019s net winnings \u2026 was a fraudulent transfer \u2026,\u201d Lowe\u2019s lawsuit said.<\/p>\n
Recovering \u2018junk debt\u2019 too <\/p>\n
Lowe\u2019s 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. <\/p>\n
The arrangement was \u201cdestined to fail and it did fail.\u201d <\/p>\n
\u201cCAG 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,\u201d the lawsuit said. <\/p>\n
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).<\/p>\n
Lea said, \u201cThere\u2019ll be cost and deductions from that. The sale price was sort of based on the value of the portfolio in October of last year.\u201d<\/p>\n
Some of the debt portfolio was collected since then and the sale price will be reduced to offset those recent collections. <\/p>\n
Lowe\u2019s lawsuit gave an update on the recovery efforts for the victims.<\/p>\n
It said, \u201cThe 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.\u201d<\/p>\n
Another $5 million will come from CAG\u2019s 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. <\/p>\n
Other companies including CAG\u2019s parent company, Oliphant, are also being sued by Ferrum\u2019s victims in multiple lawsuits. <\/p>\n
\n\tRelated\n<\/p>\n
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