The attorney defending Mike Cox of Lubbock – co-owner of embattled Ferrum Capital – said Wednesday he was limited in defending Cox in bankruptcy court because Cox had used his Fifth Amendment right to remain silent numerous times during recent legal proceedings.
“As has been mentioned here, there is a criminal investigation that is ongoing. Mr. Cox has plead the Fifth on numerous occasions based on the advice of his criminal counsel,” said Sam Gregory, Cox’s bankruptcy attorney.
“They are very cautious about him testifying and or agreeing to anything in this case. My hands are somewhat tied in my ability to defend him,” Gregory said about the bankruptcy case.
The comments came out during a hearing in front of judge Mark X. Mullin – the same judge who ruled last week Cox committed securities fraud and therefore could not discharge $21.7 million in debt – mostly related to Lubbock-based Ferrum.
On Wednesday, Mullin approved a deal between Cox and bankruptcy trustee Kent Ries, allowing Cox to keep his home.
Nearly 400 people or businesses stand to lose millions of dollars with Ferrum. At one time the case involved $82 million but that number could go up.
It is the subject of an FBI investigation and one person, Brooklynn Willy Chandler of San Antonio, has been indicted. Neither Cox nor Ferrum co-owner Josh Allen have been charged.
Trying to vigorously defend Cox in the bankruptcy court would cause heartburn for Cox’s criminal defense, Gregory said.
“We certainly have a problem if the court were to deny his discharge in total,” Gregory told Mullin.
In other words, if Cox gets no bankruptcy protection at all, that would be an issue.
The question is how much of Cox’s debt can be “discharged” or gotten rid of.
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
Ries, will finish up the paperwork from Wednesday’s court hearing and file an official document when it’s ready.
Previous court records said the maximum Cox can claim on his home is $189,050 under Texas law if he committed securities fraud. Court records said the appraised value of Cox’s home is $560,000 and there’s a $258,000 lien. That left roughly $302,000 of equity.
Cox would otherwise be limited to $189,000 of protection because of Mullin’s ruling last week. However, under the settlement, Cox simply keeps the homestead. Documentation in the case indicated he has roughly $113,000 of equity in the home.
The homestead protection for his house does not take effect until he first hands over ownership of a townhome and some property covered in the agreement. We covered the proposed agreement here.
The deal between Cox and Ries allowed Cox to keep certain items in family trusts. That property might come into dispute in other court actions but not from Ries.
Cox has been protected from ongoing lawsuits throughout Texas since he filed for bankruptcy in February 2024. During the hearing, Ries also indicated the protection ends at least as it’s related to $21.7 million of debt in the judge’s ruling on Friday.
Cox did not speak at the hearing and his use of Fifth Amendment rights was during testimony he was asked to give during previous depositions.
Correction: The original version of this story said Cox could only keep a certain dollar value of protection for his home. However, because of a settlement with the trustee, he will simply keep his home equity. This story was updated to reflect the correction.
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