Texas Advisors Convicted in $60 Million Ponzi Scheme Targeting Investors

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Joshua Allen and Michael Cox, of Lubbock, Texas, were convicted this week in federal court on charges including conspiracy to commit wire fraud, money laundering, and securities fraud, in connection with a Ponzi scheme — a fraud in which earlier investors are paid using money from newer investors — operated through their firm Ferrum Capital. The scheme involved roughly $60 million and approximately 500 investors; an estimated $9.2 million went toward the defendants' personal use. A co-conspirator, Brooklynn Chandler Willy, who hosted financial advice programs on Texas radio and TV stations and ran Queen B Advisors, pleaded guilty in March to 10 counts of investment fraud, admitting she forged client signatures and provided false documents to investigators.

The case is a warning about trust-based fraud: victims described Allen as a church deacon who had cultivated relationships for as long as 25 years before defrauding them. Allen reportedly told one victim that 'it would take Jesus himself coming back for this to be a risky investment.' Allen and Cox each face up to 70 years in prison; Willy faces up to 20 years on wire fraud and money laundering counts plus a mandatory minimum of 2 years for identity theft, with her sentencing scheduled for December 14.