Foreground of Bankruptcy Court from Shutterstock, background from court records
A dozen people want a bankruptcy judge to hold Lubbock businessman Mike Cox accountable for millions of dollars lost in Ferrum Capital.
They want the same thing 66 people (or couples) got in late April when judge Mark X. Mullin ruled Cox cannot “discharge” or get rid of $21.7 million of debt. It stays with him even after his bankruptcy case is over.
Mullin also ruled Cox violated securities laws. That’s why his debt will stick around.
The next round of people want nearly $10.7 million to stick around – in addition to the $21.7 million. The judge scheduled a June 12 hearing.
So how much is owed? When Cox filed for bankruptcy in early 2024, he listed debts to nearly 400 people or businesses worth $59 million, but the number was later updated in court records to $82 million.
Cox and his fellow co-owner of Ferrum, Joshua Allen, have not been charged with a crime.
So far only one person with Ferrum, Brooklynn Chandler Willy, was charged. Her indictment for wire fraud, securities fraud, identity theft, obstruction and more remain pending in San Antonio with prosecutors and her defense team under a deadline in August to negotiate a potential plea deal.
If convicted on every count, the statutory maximum for Willy would be more than 170 years, however, under federal guidelines the actual sentence would likely be a fraction of that.
In this latest filing, Randall Sparks and others filed their request in December. A few days ago (May 14), they told a judge Cox did not respond in court records. And they claimed it would appropriate to issue a default judgment against him.
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
- ‘I was shocked and ecstatic…’ family reacts after bankruptcy ruling preserves millions in debt related to Lubbock-based Ferrum Capital
- Cox deal to keep his house approved but some of his bankruptcy protections lost
- As Cox bankruptcy wraps up, focus shifts to use of Fifth Amendment, possibility of criminal charges in Ferrum ‘Ponzi scheme’
“[The debts] arise from fraud … embezzlement or larceny,” the May 14 court document said.
Various courts records, including the May 14 filing say: People, mostly in the greater Lubbock area but some also in the San Antonio area, were “fraudulently induced” to buy promissory notes from Ferrum Capital. Numerous lawsuits said Ferrum transferred the money to Collins Asset Group which claimed it would make money by purchasing and recovering distressed debt. Ferrum defaulted in late 2023.
Mullin ruled in April the promissory notes (or loans) were securities and needed to be registered. But they weren’t. That means the Ferrum notes were in violation state and federal securities laws.
“The Ferrum Entities were operated as a Ponzi scheme in that new investor money and funds pledged to other investors were used to pay early investors,” the judge wrote.
The recent request claimed other violations too.
“In October 2020, the Texas State Securities Board (‘TSSB’) determined that the Notes were investments and ‘alternative securities’ and sanctioned Ferrum dealer Willy for selling these alternative securities as an unregistered dealer. … [Cox] knowingly violated the TSSB Order shortly after it was issued when he contacted Plaintiffs claiming that their investment in Ferrum was safe and assuring investors there was no cause for concern,” it said.
LubbockLights.com has reached out to attorneys for Cox and Allen in the past. They have not responded to requests for a comment. Both men have asserted their Fifth Amendment rights in refusing to answer questions in lawsuits filed against them.
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