Composite image by LubbockLights.com. Background image of Brooklynn Chandler Willy from her website
The arrest of a radio host and financial advisor in San Antonio touched on a bankruptcy case in Lubbock with at least $59 million at stake and claims that hundreds of people will lose all or most of the money they invested or loaned to Lubbock-based Ferrum Capital LLC.
The indictment leading to that arrest also revealed an FBI and IRS criminal investigation in Lubbock and San Antonio.
“On or about November 2, 2023, the Federal Bureau of Investigation (‘FBI’) and the Internal Revenue Service Criminal Division (‘IRS’) began a criminal investigation into an investor fraud scheme centered in San Antonio and Lubbock, Texas,” the indictment said.
Brooklynn Chandler Willy was arrested by federal agents this month and remains in federal custody without bond.
Matthew King, a San Antonio attorney representing some of the victims, believes more criminal charges are on the way. He also pointed us to federal records showing one of the major players in a previous, but related case, went to prison in 2021. (More on that below.)
Willy’s indictment accused her of obstructing the investigation of investor fraud in both San Antonio and Lubbock. The indictment described “company 1” in Lubbock and “company 2” (under the same ownership) without naming them.
However, a lawsuit filed in 2023 said Willy is an affiliate of Ferrum Capital. The lawsuit resulted in a judge taking control of Ferrum and placing it under receivership. By then, Ferrum had defaulted.
Also named in the lawsuit were Joshua Allen and Mike Cox – both listed as corporate officers in Ferrum.
It’s one of a number of lawsuits. There are at least five.
“The entire scheme could be properly described as a Ponzi,” said King. In a Ponzi scheme, new investors are recruited to cover the cost of paying returns to previous investors.
“It’s not placing the investments ultimately into something that’s gonna earn returns. At almost no point was there any legitimate investment activity at all,” said King.
Victims may be lucky to recover 20-to-30 cents on the dollar, he added.
Cox filed for bankruptcy February 20 in Lubbock listing nearly 400 people or businesses to whom he owed money – most of them for a “loan to Ferrum Capital.” The amounts ranged from $10,000 to $2.5 million, adding up, Cox said, to $59 million.
The bankruptcy also allowed 240 people or businesses to document their own claims against Cox regardless of what he listed in court records. Many are duplicates between the two lists. A judge has not yet ruled on which claims are allowed, but if they all stand, the total filed by other people is nearly $69 million – $10 million more than Cox’s number.
Cox listed assets of about $1.2 million.
Victims are challenging Cox’s bankruptcy.
LubbockLights.com reached out multiple times to attorneys for Cox and Allen, but they did not respond.
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All of their retirement funds
In October of last year, Judy Musgrove and Kathleen Priebe sued Willy and her two companies – Queen B. Advisors, and Texas Financial Advisory.
The lawsuit, filed in Bexar County, said, “… she recommended … two women in their 60s and 70s … invest all of their retirement funds in risky unregistered investment contracts …”
Musgrove and Priebe also sued Cox, Allen, Ferrum Capital and Texas-based Collins Asset Group (which borrowed the investor money from Ferrum).
“Willy did not inform the Plaintiffs that she didn’t have a license to recommend the investment contracts, that the investments were not structured properly, or that they were unregistered securities. Willy did tell the Plaintiffs that their investment was safe, principal and profits were guaranteed, and that there was no risk of loss,” the lawsuit said.
It was not the first time Willy got in trouble.
The lawsuit claimed, and official state records confirmed, even before taking the savings of the two women, Willy illegally sold unregistered securities from 2013 to 2019. State regulators in 2020 ordered Willy to pay back $2.75 million in commissions. Her state license was temporarily suspended.
Musgrove and Priebe claimed after that punishment and even after the Texas State Securities Board ordered Willy not to sell any more unregistered securities (like the ones Musgrove and Priebe purchased), she continued doing it anyway.
LubbockLights.com reached out to Randall Pulman, attorney for Musgrove and Priebe, for comment. We have not heard back yet.
Cox claimed otherwise
In bankruptcy records, Cox admitted he’s been sued several times in Texas and other states. But Cox, “denies that he engaged in securities fraud.”
Cox claimed in court records, “In January of 2020, Ferrum Capital sought legal advice regarding the lending program it had with … Collins Asset Group.”
Cox and Ferrum Capital were told the loans were not securities and did not need to be registered with the Texas Securities Board, Cox claimed.
“Further, Ferrum Capital was audited by the Texas Securities Board. … The Texas Securities Board did not issue any findings that Ferrum Capital was ‘selling’ unregistered securities,” Cox claimed.
LubbockLights.com reached out to the attorneys for Cox, Donald R. Littlefield and Brad Odell, to comment. We have not heard back. We called Odell on Monday; Littlefield on both Friday and Monday. We reached out to both by email on Monday.
Allen, the other co-manager at Ferrum, raised legal technicalities in one of the lawsuits in his defense, but with fewer details than Cox.
LubbockLights.com reached out to Allen’s attorney, Christopher Dodrill, on Friday and Monday by phone. We reached out to a second attorney for Allen, Josh Frost, on Monday. But we have not heard back yet. We also sent emails on Monday.
The Schaffers’ class-action lawsuit
Also last year, Gay and David Schaffer of Johnson City sued Ferrum Capital, Cox, Allen, Willy and Texas Financial Advisory in federal court. The Schaffers’ class action lawsuit also named Collins Asset Group, claiming that’s where the money was eventually funneled.
The Schaffers claimed they put up less than $716,000 of retirement savings with Willy. (Cox’s bankruptcy petition listed more than $741,000.)
Their lawsuit said the Schaffers “… were intrigued by Brooklyn Chandler Willy and her services after hearing her discuss investment opportunities over the radio.”
So, they met with her in person in 2019. Willy made promises about how their money was secure even if something went wrong at Ferrum, the lawsuit said.
Willy told the Schaffers she personally drove to the home of one of the company owners, Walt Collins, to personally meet him, “ascertain his character and reliability,” and make sure he could be trusted, according to the lawsuit.
“Willy continued by informing the Plaintiffs that even if Ferrum were to dissolve, the lenders would be protected because Ferrum owned a large amount of construction equipment,” the lawsuit said.
How this was supposed to work
People were told Ferrum would take their money – the payments were called loans – and pass it to Collins Asset Group. Collins would purchase distressed debt. These might be debts owed by consumers or businesses that were unlikely to be recovered. If the debt could be collected, people were told, it would make money.
Ferrum also passed money onto a different company in Maryland.
The lawsuits and bankruptcy objections claim none of this was legitimate. It was instead the selling of unregistered securities – paying big commissions to Ferrum but doing little else in terms of business activity.
In the summer of 2023, Ferrum began defaulting. By the end of the year, it was completely in default, court records said.
Schaffers drop one lawsuit, then filed another
The Schaffers dropped their federal lawsuit shortly after Cox filed for bankruptcy. But they’re not done. They filed another complaint in state court. Others have filed objections in the bankruptcy court to stop Cox from discharging his debt.
The Schaffers lost a lot of their retirement money but not all, said King, who described another woman, Karen Aguilar of Helotes, who had to go back to work after retiring.
The bankruptcy file indicated she lost $450,000.
People were promised an 8 percent quarterly return, King said, adding Willy was paid for soliciting people to Ferrum.
“One of the things that she was doing, she had a radio show every Sunday. And there was a paid advertisement. But I think … a lot of people had the impression that meant there must have more legitimacy to her activities,” King said.
Cox would present his pitch to people at churches, King said.
“Faith is often one of the ways in which people are exploited. … Especially up in Lubbock, we were seeing that,” King said. “We spoke with some individuals where the entire church group, like a Bible study group, ended up being wrapped into this.”
King did not think any of Lubbock’s largest churches got wrapped up in this.
“Certainly, we could envision additional criminal investigations and indictments that could occur later on down the line,” King said.
When asked how many more people might be in trouble, King answered, “I would love to be able to answer that question.”
King also explained Willy was not charged with fraud, but obstruction.
“She was instructing clients not to seek an attorney. And that is absolutely a form of obstruction,” King said.
“Many of these people were kept away from getting help and representation,” King said, adding it was at a time when they were most vulnerable and most in need of professional help.
LubbockLights.com asked how much money victims might hope to get back.
“If you’re up over half the money back, that’s considered a very good result. I could certainly tell you 20 to 30 cents on the dollar return is not uncommon in cases involving a fraudulent investment scheme,” King said.
Cox claimed these were loans, not unregistered securities. However, multiple victims claimed in court records that, yes, they were unregistered securities.
King thinks it will be up to the judges in these multiple court cases to sort that out.
This happened before with Collins, another company
Federal court records said one of the companies, Collins Asset Group, had already been sued and forced to settle a class action lawsuit in Atlanta for less than $16 million. King said that should have been the end of it.
The partner company for Collins Asset Group, Sonoqui, went away, King said, after the settlement in late 2020. And that’s when Lubbock-based Ferrum got involved. Ferrum was registered to do business starting in 2017.
The founder of Sonoqui was, according to the federal settlement, Daryl Bank. He was sentenced to 35 years in federal prison for conspiracy and wire fraud.
“Our allegation and our assertion is that there’s simply a rebooting of Sonoqui,” King said.
Same scheme, he said, different company.
“Sonoqui was being run by Daryl Bank who was arrested. So of course, when he was arrested, Sonoqui ceased to do business. Ferrum is the replacement … The documentation between Sonoqui and Ferrum was virtually identical.” King said.
“Even though a primary individual in one of the parts of the scheme was arrested, the scheme was allowed to continue,” King said.
“I think that’s one of the things – I don’t have the answer on that one. If everything was being done properly, this scheme should never have continued beyond 2018,” King said.
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