Mike Cox, foreground, with court ruling, background.
Leslie Workman doesn’t expect her dad – a veteran who served in the Army in Iraq and Afghanistan – to recover money from Ferrum Capital or related companies.
But a judge ruled Friday that Ferrum Capital co-owner Mike Cox cannot erase $21.7 million in debt after he said Cox violated Texas law by selling unregistered securities.
That ruling made a difference, said Workman.
“I was shocked and ecstatic. … It’s an awesome thing. I’m so hopeful. … I haven’t felt hope since all this happened. I guess I just never really thought anything would happen,” said Workman, who lives at Lake Alan Henry.
That changed when she saw the news.
“I just think it’s time to stand up. It’s OK to stand up and fight. These types of decisions change things, and the people start getting protected,” Workman said.
Her dad lost money in a different way than most other participants. His was in the form of insurance policies Workman said were cashed out without his knowledge rather than the high-interest loans described in numerous lawsuits.
Fort Worth Judge Mark X. Mullin’s ruling means Cox will still owe money after the bankruptcy case is over.
But some things won’t change.
Ongoing coverage of Ferrum Capital
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- Hundreds may have lost millions with troubled local company after criminal case extends to Lubbock from San Antonio
- More charges filed in San Antonio related to FBI investigation of troubled Lubbock firm; one victim speaks about losing retirement savings
- Deal proposed in Lubbock $82 million Mike Cox bankruptcy case could recover small portion for Ferrum participants
- Threat illustrates frustration of Ferrum Capital investors, who want to know where money went, if they’ll recover any
- Cox bankruptcy case in Lubbock may get new judge, as hundreds wait to see about their millions of lost savings
- Judge rejects Lubbock man’s efforts to use bankruptcy to avoid millions of debt in Ferrum Capital case
Amarillo attorney Kent Ries, bankruptcy trustee, said Monday by email his settlement with Cox to keep certain property in exchange for letting go of any claim on a townhome is not changed by Friday’s ruling.
“It has no effect on my motion. Discharge is a separate issue. The settlement is really about their homestead and the assets in the trusts and the townhome that the estate would be getting,” Ries said.
Cox owns the home he lives in. It’s exempt in both bankruptcy court and the various state courts where Cox was sued.
“Debts being nondischargeable just means that those creditors can still take action to collect on their debts, like suing the debtor and getting a judgment,” Ries said.
Ries basically restated Cox will still owe money (because of the Friday ruling) when the bankruptcy is over.
Click here to read the ruling.
“But under Texas law the home, as well as most everything in a home, are exempt. Which is why most judgments in Texas are uncollectable,” Ries said.
People who lost money can still garnish any of Cox’s future wages, or they can make a claim if he inherits money.
The bankruptcy court will hold a hearing this week on the proposed settlement between Cox and the trustee.
A recap
Cox was half-owner of Ferrum along with Josh Allen. The ruling Friday applied to 66 people (or couples) who filed an objection (technically called an adversarial case). The bankruptcy as a whole indicated Cox owes more than $82 million to 400 people. The dollar figure could go higher as the case develops.
Cox solicited money from people in the form of loans to Ferrum. According to numerous lawsuits, Ferrum lent the money to another company called Collins Asset Group. We explained this relationship in more detail in our previous coverage.
Allen was mentioned prominently in Friday’s ruling and faces a long list of lawsuits against him. But so far he and Cox have not been charged with a crime. One person associated with Ferrum, Brooklynn Chandler Willy, was charged with wire fraud, securities fraud, obstructing an FBI investigation in San Antonio and Lubbock, and other offenses. Her criminal case is pending.
Choosing to spread the word
Workman’s dad, retired Army Major Roger Stark, served 23 years in the military.
“Anybody that knows my dad knows he is the most selfless human you’ll ever meet. He’s just a super-forgiving guy,” Workman said.
She already felt like the American government used her dad for his service and “spit him out.”
“We just keep finding more and more situations where people have just taken advantage of him. And I’m just over it,” Workman said.
But this case, her dad was not the only one.
“I’ve run across numerous people on accident – I mean completely on accident. I’m not looking for these people, but I just keep finding more and more victims,” Workman said.
The family was asked to participate in the lawsuits, Workman said, but they said no.
Part of her logic is the money is simply gone. Her dad lost roughly $100,000 on insurance policies. But the loss continues to mount because he’s still paying on policies he agreed to take.
She chose instead to work on getting the word out. For example, she called a church involved with Allen. Attorney Ed Price described in our previous coverage how Cox and Allen used faith to gain people’s trust.
“I’ve called the church organizations. … People still are just defending these men. The organizations are defending these men,” Workman said.
Workman mentioned her dad losing money in the form of insurance policies. She wasn’t sure of the technical details, but in our previous coverage, Price said Ferrum and related companies sold something called a viatical settlement. It’s a life insurance agreement.
Someone in a viatical can purchase all or part of another person’s life insurance policy by paying the premiums. Price said it’s high-risk. An investor can get stuck with the premiums and no payout when the other person dies.
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