Composite photo, court records and Mike Cox “about” page online.
The complex Ferrum Capital story we first reported back on December 23 took a twist last week.
LubbockLights.com set up an interview with San Antonio attorney Matthew King, representing 49 people who lost money with the embattled Lubbock company.
King apologized last week for not responding sooner, saying he was dealing with a threat against one of the people associated with Ferrum.
“We have to try to take steps to keep violence away from any of this,” King said.
“The personal damage … inflicted on so many people is very difficult for some folks to deal with … in an even-tempered way. It’s probably unsurprising that there is so much emotion that has gone into all these plaintiffs, many of whom had their lives ruined, that it’s not out of the realm to expect there would eventually be some threats,” King said, adding he could not provide details.
LubbockLights.com interviewed King and Amarillo attorney Kent Ries to follow our story last week on a proposed compromise between the U.S. Bankruptcy Trustee and Mike Cox.
Claims in the bankruptcy total more than $82 million – much of it tied to Ferrum, co-owned by Cox and Joshua Allen.
Ries represents the bankruptcy trustee, whose proposed deal with Cox allows him to keep hundreds of thousands in assets because they were in a trust.
We wanted to know:
- How much money could investors recover?
- Could a criminal case affect that?
- Where did the money go?
- What’s next?
- And we wanted to learn more about Cox’s bankruptcy deal – as did many of you. One of our Facebook followers said about Tuesday’s story: “Dumb question here, why does he get to keep the $44,000 boat while giving up a $6,000 boat. Is this not backwards?”
Leading up to now
Cox, Allen, Ferrum and related companies were sued multiple times since late 2023. A woman identified as an affiliate of the company – San Antonio radio host and financial advisor Brooklyn Chandler Willy – was indicted last year and accused of obstructing an FBI investigation. She was reindicted this year on 14 counts including securities fraud and wire fraud. Her case is tentatively set for trial in late August.
Willy is the only one of the three to be charged, according to a search of federal records.
Ferrum is not named in the indictment but there are references to “company 1” in Lubbock matching Ferrum’s description in other legal proceedings. In one case, the indictment accused Willy of not placing $500,000 from a San Antonio couple with “company 1” but keeping for “her own purposes.”
A portion of the January 22 indictment said:
Instead, Willy used this money for her own purposes, including payments to a credit card used by Willy, checks made payable to Willy personally, payments to other investors, and payments to another business owned and controlled by Willy.
Previous coverage:
- March 4: Deal proposed in Lubbock $82 million Mike Cox bankruptcy case could recover small portion for Ferrum participants
- Jan. 27: More charges filed in San Antonio related to FBI investigation of troubled Lubbock firm; one victim speaks about losing retirement savings
- Dec. 23: Hundreds may have lost millions with troubled local company after criminal case extends to Lubbock from San Antonio
How much money could investors recover?
Nearly 300 people or businesses are affected by the Ferrum case – many of them in or near Lubbock. Some called Ries.
“We are getting a number of calls, and that’s fine. People are welcome to call and ask. Of course, the main question you get is, ‘What do you think I might get in this case?’” Ries told LubbockLights.com.
“I wish I knew the answer to that. There’s a significant amount of debt that’s outstanding – apparently based on claims that were filed – but there’s not near as many assets. There’s just not anywhere near the amount of assets as there are claims,” Ries said.
The prognosis is grim.
“My gut feeling is it’s not going to be a high percentage recovery case,” Ries said.
Sometimes the questions aren’t really questions.
“Sadly, many of the conversations are not so much questions just as people’s thoughts about how this all happened. Those really aren’t questions so much as just general unhappiness,” Ries said.
The Cox bankruptcy is not the only recovery for Ferrum participants, Ries said.
“There are other recoveries,” he said, including other lawsuits.
What’s next is the criminal case against Willy. King pointed out she might not be the only one to get charged.
“As far as the potential for further indictments, we are very confident those will come on the basis of evidence we have knowledge of that has been collected,” King said.
“The criminal case could certainly impact how the civil case proceeds,” King said.
Sometimes it helps if criminal charges are filed, King said. For one thing, it’s harder for someone in jail to move or conceal assets.
Willy’s criminal case has an August 1 deadline for reaching a plea bargain or a tentative trial date of August 25.
Where’d the money go?
“That is a good question,” Ries said.
Ries asked Cox questions during a creditor meeting in the ongoing bankruptcy.
“The funds were going to be used to buy fairly high-risk type investments. In fact, ironically, some of the investments are buying bad debt, including debt that might be from bankruptcy cases,” Ries recalled of the answer he got from Cox.
Ferrum worked with Texas-based Collins Asset Group to purchase distressed debt. If Collins collected the debt, everyone would make money.
“He kind of went over the same thing I just said as to where he thought the money was supposed to be going, but he really doesn’t have much of an answer as to why all these investments didn’t pan out,” Ries said.
King used words like scheme, fraud and conspiracy. In various lawsuits, Cox and Allen denied wrongdoing.
“A great sum was taken by the local conspirators – in excess of $20 million,” King said, claiming money never went to Collins. Where did it go?
“I really wish I had an answer for you,” King said.
King and other attorneys are still working on it. He speculated the money is gone.
“But a great deal it will have been wasted squandered. … They want to live the high life. They want to live it up, and often that means consumption of sometimes vast sums of money on luxury items – luxury travel – basically things for which we cannot give much recovery,” King said.
The bankruptcy deal
In 2015 Cox and his wife set up three trusts, according to court records: Cox Vehicle Trust, M&K Cox Family Trust and M&K Cox Investment Trust.
According to the compromise Ries put forward to Cox, the property in those trusts is worth at least $369,800. Some of the items are of unknown value and not included in the total.
“He doesn’t own property that’s in the trust. The trust is a separate entity,” Ries said.
For Ries to access anything in the trusts, it requires proof of a “fraudulent transfer.”
Ries wrote in court records, “The Trustee might have to prove … [Cox] settled the trusts with the actual intent to hinder, delay, or defraud his creditors at the time of their creation.”
“There are fraudulent transfer laws in both Texas and in the bankruptcy code that let me go back anywhere from two to four years. … It’s specifically to keep someone from planning a bankruptcy case and saying, ‘Hey, I’ll get rid of all my property. I’ll give it away to friends or family or put it in a trust,’ or some such thing.” Ries said.
Ferrum Capital was first registered as a business with the Texas Comptroller in 2017 – roughly two years after the trusts were set up.
And yet, according to dollar figures in the compromise – when added up by LubbockLights.com – Ries negotiated with Cox to get $248,000 from the trusts plus outright ownership of a townhome he purchased with his daughter in 2020.
Cox and his trusts get to keep :
- 2017 BMW x1 valued at $17,500
- 2010 Ranger Boat valued at $44,000
- 2025 Toyota Tundra valued at $45,000
- 2014 Bad Boy Buggie valued at $2,000
- A bank account valued at $1,300
- Jewelry valued at $9,000
- Two rifles (inherited from grandfather) valued at $3,000
There’s a March 19 deadline if creditors want to make a written protest.
Other non-exempt assets would also go to the bankruptcy estate, but those are not covered under the compromise.
“We have a very, very liberal exemption scheme where people get to keep their homestead in an unlimited amount – retirement accounts in an unlimited amount – investment products in an unlimited amount – and a fair amount of personal property in a significant amount,” Ries said.
Cox also gets to keep full legal protection for his house – the so-called homestead exemption.
However, there is an exception. That’s how Ries got a deal.
If Cox committed securities fraud, his homestead exemption is no longer unlimited. It’s cut down from the full value – $560,000 – to $189,000. Cox denied securities fraud in the case. See our previous story.
“The trust is giving up some property in exchange for the homestead exemption,” Ries said.
Cox still has to pay the monthly mortgage, but he gets to keep the house.
Taking a home in bankruptcy is not easy – as illustrated by the townhome Ries went after.
“Even then if I got the townhome, I have to sell that,” Ries said.
The mortgage has to be paid. Bankruptcy won’t stop that. Property taxes too. There are closing and realty costs.
“There are assets in the compromise that are not cash. So those all have to be sold. … Some are easy like say silver bars. Vehicles are relatively easy – vehicles and boats. But there are some business entities in there that may be able to be sold for cash straight up,” Ries said.
“We’ll see if parties object and we’ll see if the court approves it,” Ries said.
King’s clients would be among those who could object.
“There are cases of bankruptcy where it looks like the only alternative you have is to accept a smaller amount in exchange for being able to get things done quickly and with more minimal cost, sometimes that can be most beneficial.” King said.
Short answer – we’ll see.
“We haven’t agreed with the settlement yet. Obviously, if we do feel that it is more beneficial, then we’ll sign on,” King said.
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