Two Lubbock men face up to 70 years in federal prison after a jury in San Antonio convicted them for their roles in a massive Ponzi fraud scheme.
Jurors on Tuesday found Joshua Allen and Michael Cox guilty of counts of conspiracy to commit wire fraud, conspiracy to commit money laundering, conspiracy to launder monetary instruments, and securities fraud.
Allen and Cox, who were both out on bond while awaiting trial, were remanded into custody after the guilty verdicts were announced. The men are expected to appear Dec. 10 before U.S. District Judge Fred Biery for a sentencing hearing.
Their convictions come after a weeklong trial that began Aug. 10 during which prosecutors presented evidence from an FBI and IRS criminal investigation division that showed
the two men used four investment companies: Ferrum Capital LLC, Ferrum II LLC, Ferrum III LLC, and Ferrum IV LLC, as part of their scheme to cheat millions of dollars from their investors.
Court records show that the group stole about $60 million from 500 people.
The investigation into the scheme showed the men convinced their victims to invest into their companies, telling them their money was going to secure investments.
In reality, the men never invested the money. Instead, they paid their older investors with money from new investors all while paying themselves commissions at 10.75%.
The investigation showed that the men's scheme required money from new investors to keep it going.
To that end, the men hired Brooklynn Chandler Willy of San Antonio to get more investors.
Investigators learned that the group collectively took millions of dollars from their investors, most of whom lost some or all of their investment into the Ferrum Entities
Willy pleaded guilty in March to counts of wire fraud, engaging in monetary transactions in property derived from specified unlawful activity, aggravated identity theft, conspiracy to commit wire fraud, and conspiracy to commit money laundering.
Willy was allowed to remain out on pretrial release after entering her guilty plea and is set to appear in court for a Dec. 14 sentencing hearing.
“In the midst of this Ponzi scheme, Allen and Cox collected a handsome fee by telling various egregious lies, even using their self-proclaimed faith and reputation in their community to con the investors they victimized,” said U.S. Attorney Justin Simmons. “This case shows that within the Western District of Texas and across the Department of Justice, we are resolved to prosecute cases like these where individuals have preyed on the innocence and trusting nature of everyday Americans as Michael Cox and Joshua Allen did here.”
Investigators spent years unraveling the scheme in which the men preyed on close friends, community members and others, said Special Agent in Charge Christopher J. Altemus Jr. of IRS CI’s Texas Field Office.
“Our work with the FBI and the U.S. Attorney’s Office cannot undo the victims’ suffering, but this verdict may provide some measure of satisfaction that these criminals will pay for their financial crimes," he said. "The women and men of IRS-CI will continue to band together with their law enforcement partners to pursue those who commit financial crimes and steal from trusting individuals.”
Gabriel Monte is the criminal justice reporter for the Lubbock Avalanche-Journal in Texas. Have a news tip for him? Email him at gmonte@lubbockonline.com.
This article originally appeared on Lubbock Avalanche-Journal: Ferrum Capital's Allen, Cox now await fate in federal Ponzi scheme case
