Texas Advisors Convicted in $60 Million Ponzi Scheme
A pair of Texas advisors face decades in prison after they were convicted this week of co-conspiring with a radio personality on a Ponzi scheme that bilked millions from investors, according to the Justice Department.
Lubbock residents Joshua Allen and Michael Cox were convicted at the end of a weeklong federal trial in San Antonio on counts of conspiracy to commit wire fraud, money laundering, laundering monetary instruments and securities fraud.
According to Christoper Altemus Jr., special agent in charge of the Internal Revenue Service’s Criminal Investigations Texas office, the case “took years to unravel.”
“Allen and Cox preyed on their closest friends, their community and many others across the country,” he said. “They took millions of dollars to enrich themselves while devastating lives along the way. To say they violated trust is grossly insufficient—they destroyed it.”
According to court documents, Allen and Cox owned and controlled several investment companies that did business as Ferrum Capital and regularly solicited investors. They worked with Brooklynn Chandler Willy, who owned the San Antonio-based Queen B Advisors (also known as Texas Financial Advisory), which offered asset management and financial planning services. Willy also hosted financial advice programs on numerous Texas radio and TV stations.
In reality, Ferrum Capital was a massive Ponzi scheme in which Allen, Cox and Willy conspired to mislead victims about the nature of their investments and concealed their high commissions.
According to KCBD News, the case involved about $60 million and approximately 500 investors, and much of the money went to pay earlier investors, allowing the scheme to continue; it’s estimated that about $9.2 million went toward the defendants’ personal use. KCBD also spoke with several victims, one of whom described Allen as having “probably been grooming” the couple for 25 years, describing how he had been the deacon at their church and was on the church’s prayer team. According to investigators, Allen told one victim that “it would take Jesus himself coming back for this to be a risky investment.”
In March, Willy pleaded guilty to 10 counts of investment fraud in a Texas federal court; according to the DOJ, she convinced victims to invest funds in the Ferrum Capital scheme and pocketed the profits to pay off credit card bills, as well as payments to other investors and to another business she owned. She also forged several clients’ signatures and provided false documents to federal investigators.
According to the San Antonio Express-News, Willy confessed during Thursday’s hearing, telling a federal judge that she “was a crook,” and “was very sorry.” Some of her victims were in the courtroom, with one woman yelling at Willy, “I hope you rot in prison,” after the proceedings ended.
Willy faces up to 20 years in prison on six counts of wire fraud and money laundering, up to 10 years for engaging in transactions in property derived from the scheme, and a minimum of 2 years for identity theft, all of which would run consecutively to the other punishments. Her sentencing hearing is scheduled for Dec. 14.
Allex and Cox both face up to 70 years in prison, and their sentencing hearings haven’t been scheduled. They were taken into federal custody following the guilty verdicts.
