More than a year after Joshua Allen, Mike Cox indicted by feds, Ferrum Capital trial begins Monday in San Antonio

Almost nine years after they started Ferrum Capital in Lubbock, Joshua Allen and Michael Cox go on trial in a San Antonio federal court Monday morning.

Prosecutors accused the men of securities fraud and conspiracy – claiming they orchestrated a years-long investment fraud taking nearly $68 million from investors.

Both pleaded not guilty.

If convicted on all counts, they face up to 70 years in prison.

Here’s a look at what lawyers involved in Ferrum think may happen in court and how this all developed.

Pre-trial tactics, will defendants testify?

Leading up to the trial, prosecutors and defense attorneys have battled over whether the charges should be thrown out and what evidence should – or should not – be allowed over the next few weeks.

Lubbock attorney Ed Price helped some of the victims sue Ferrum, Allen, Cox and Brooklynn Chandler Willy, their San Antonio affiliate, who pleaded guilty earlier this year.

LubbockLights.com asked Price about how he sees the trial unfolding – and if he expects Allen, Cox or Willy to testify.

Allen and Cox have a long list of things they’d like U.S. District Judge Fred Biery to exclude. Price thinks it depends if Allen and Cox testify or remain silent.

“If they don’t testify, then there are certain things that will be kept out. If they do testify, they’ve opened the door to just about everything,” Price said.

“Typically, you do not testify because you’re presumed innocent until proven guilty. … However, there are occasions where if the evidence is so monumental, you may have to have them testify and have any chance of winning,” Price said.

One example – Allen filed a document in late July asking to disallow any mention of Daryl Bank in the upcoming trial (read below to see how Bank is connected). Prosecutors objected and Biery has not ruled yet.

“I would have done the same thing,” Price said.

“You’re not allowed to try somebody just on innuendo or by relating them to other folks and that sort of thing. So, I would have made the same motion, and I think that’s maybe a pretty good motion,” Price said.

Allen should be tried for what he’s accused of doing with Ferrum – not “the prior scheme,” he said.

Randall Pulman, a San Antonio attorney representing many of the victims, thinks the case is complicated. But victim testimony against Allen and Cox will be strong, he said.

“I think they’re thinking they’re gonna get lucky. Where that luck comes from, I don’t know,” Pulman said.

“There are so many victims here that are going to tell the same story. It’ll seem like a lot at the beginning, but the pattern is always the same,” Pulman said.

“That’s pretty hard evidence to overcome,” Pulman said.

LubbockLights.com reached out to attorneys Anthony Box and Michael Gross by email and by phone to offer them a chance to comment on behalf of Allen or Cox.

After this story was published, Gross provided a brief statement, saying, “In this country a person is presumed innocent. Mr. Mike Cox is presumed innocent and looks forward to his day in court to present his defense.”

If Box choses to accept the offer on Allen’s behalf, we will provide an update.

When Willy took a plea deal, her sentencing was originally scheduled in September – after Allen and Cox were to go on trial. Willy’s sentencing was then pushed back to mid-December.

Price thinks he knows why.

“She’s got to cooperate as part of her plea. … That’s why the sentencing was put off, because they’re not sure how long this trial is going to take,” Price said.

He’s anticipating 70 or more witnesses. The trial is scheduled to last three weeks, but Price said six weeks is not unrealistic.

But Price thinks the prosecution might keep Willy’s testimony in reserve – only calling her to the stand if they need to.

“The problem with her is she’s an admitted con artist and liar and so it’s hard to put somebody up there that you know has no credibility,” Price said.

LubbockLights.com asked Pulman if there are techniques for attorneys to strengthen Willy’s credibility in front a jury.

“No good ones,” Pulman answered.

Before Ferrum

The story starts in 2012 – when Daryl Gene Bank – a Florida resident with ties to Virginia Beach – along with others started running an “investment fraud scheme” that cost victims $20 million or more, according to a press release from the U.S. Department of Justice.

In 2017, Bank was arrested and later the victims filed a class-action lawsuit, which recovered almost $16 million in a 2020 settlement. Bank used companies, including Sonoqui and Diversified Financing, to transfer money over to Collins Asset Group, according to the lawsuit.

Investors were told Collins would purchase distressed debt portfolios. If Collins could collect on those debts, everyone would make money.

After Bank’s criminal case and the lawsuit, Sonoqui and Diversified ceased operations. Collins admitted no wrongdoing in its settlement of the class action suit and started dong business with Allen and Cox in Lubbock.

One of the San Antonio attorneys who helped victims sue Ferrum was Matthew King.

“If everything was being done properly, this scheme should never have continued beyond 2018,” King told LubbockLights.com in 2024.

Bank was sentenced to 35 years, according to a public statement from the DOJ. Technically, his conviction was not for the Sonoqui transactions but another company. However, Sonoqui still played a role in the case, according to court records. And it became the precursor to Ferrum.

Ferrum conceived and born

In the current criminal case, prosecutors wrote, “Bank owned the precursor to Ferrum Capital. Allen and Cox solicited investors into Bank’s companies and when those notes were due, used money from subsequent Ferrum investors to pay some of those notes.”

Allen, Cox and Willy “never mentioned” the out-of-court settlement, prosecutors said.

Federal prosecutors in Texas claimed in court records, that had Allen, Cox and Willy told everyone, then investors “would have altered their decision to invest.”

A few months after Bank was arrested, Allen and Cox filed documents with the Texas Secretary of State to officially form Ferrum. That was late 2017.

Exhibits filed against Allen and Cox showed they used documents from Sonoqui to get started with Ferrum.

It didn’t last.

Pulman said, “They saw all that happen with Mr. Bank and then went did the same thing.”

“Those guys knew from the moment that they took the first money, that it was never going to get paid back,” Pulman said.

‘It was doomed from the beginning’

“It was doomed from the beginning,” said Price.

It was a Ponzi scheme, said Price, a term also used by federal prosecutors when they indicted Allen and Cox in July of last year.

“A Ponzi scheme is where you typically promise way more than the market will bear,” Price said.

“Early on you get a certain number of folks to invest. … When the earlier folks’ investments come due for repayment, then you sell to others – take the money that you get from them … and use it to pay off the earlier investors,” Price said.

Eventually, there are too many investors – too much money at stake. There’s no one left to put more money into it. The whole thing crashes, Price said.

“That’s what happened with Sonoqui. That’s what happened with Ferrum. That’s what happens with every Ponzi scheme,” Price said.

Victims came forward

Victims like Judy Musgrove and Kathleen Priebe sued in San Antonio – claiming Willy (who was a radio host and occasionally featured on TV) recommended “… two women in their 60s and 70s … invest all of their retirement funds in risky unregistered investment contracts …”

Dwain Strait of Lubbock and his wife were 70 and 65 respectively when they lost their retirement money in Ferrum.

“They portrayed themselves in their office with professionalism and as Christians,” Strait told LubbockLights.com in early 2025.

Cox had a Bible open and displayed up on his desk, Strait also said.

Many victims lost life savings or retirement savings according to federal prosecutors.

Meanwhile, efforts continue in bankruptcy court and numerous lawsuits to recover some portion of money for Ferrum victims.

A conviction would help those efforts, Pulman said.

“Presuming there’ll be a restitution order, there are people in the Department of Justice who do nothing but collect those and they have better ways of finding assets than we do,” Pulman said.

Walt Collins has reportedly died

Price previously said he thought Walt Collins – the former owner of Collins Asset Group – should be criminally charged right alongside Allen, Cox and Willy. LubbockLights.com asked Price if prosecutors might call Walt Collins to the stand.

That’s not going to happen, Price said, adding he’s heard Collins died.

Collins had been in poor health last year when he gave sworn testimony in one of the lawsuits.

Pulman said, “I can tell you it was confirmed to me [from his attorneys] that he passed away. … They called to tell me that.”

But LubbockLights.com has been unable to find a funeral announcement or similar public notice.

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