SAN ANTONIO — A federal jury convicted two Lubbock men Tuesday of operating a Ponzi scheme that cost hundreds of investors millions of dollars, officials stated this week.
Joshua Allen and Michael Cox were convicted of participating in the scheme with Brooklynn Chandler Willy of San Antonio, who previously pleaded guilty to 10 federal charges.
Quick Fact Checklist:
- Defendants: Joshua Allen and Michael Cox
- Hometowns: Confirm both are residents of Lubbock, Texas
- Co-defendant: Brooklynn Chandler Willy of San Antonio
- Verdict date: Replace “Tuesday” with the exact date for online publication
- Charges: Confirm the official wording of both money-laundering conspiracy charges
- Investor losses: Seek an exact loss figure if one is available
- Victims: Hundreds of investors
- Maximum penalty: Up to 70 years for Allen and Cox
- Custody status: Both taken into federal custody after the verdict
- Sentencing: No dates scheduled for Allen or Cox
- Willy sentencing: Add the year to “Dec. 14”
- Penalty language: Maximum penalties are not necessarily the sentences the defendants will receive
- Style note: “Massive” was removed as subjective; “multimillion-dollar” is more precise and SEO-friendly
According to court documents and evidence presented during the weeklong trial, Allen and Cox jointly owned and controlled four investment companies: Ferrum Capital LLC, Ferrum II LLC, Ferrum III LLC and Ferrum IV LLC.
Allen, Cox, Willy and others working at their direction solicited people to invest in the companies.
Willy owned Chandler Capital Holdings and Queen B Advisory LLC, which did business as Texas Financial Advisory. The company claimed to provide asset-management and financial-planning services.
Willy pleaded guilty to 10 charges in March.
Prosecutors said Allen, Cox and Willy conspired to mislead investors about the security of their investments while concealing the large commissions they collected. Allen and Cox also lied about the nature of the investments.
Hundreds of victims collectively lost millions of dollars.
Much of the money collected from new investors was used to pay earlier investors, allowing the defendants to conceal the Ponzi scheme and attract additional victims. Prosecutors said the conspirators also used substantial amounts of the money for their personal benefit.
Following the trial before U.S. District Judge Fred Biery, the jury convicted Allen and Cox on four charges:
- Conspiracy to commit wire fraud;
- Conspiracy to commit money laundering;
- Conspiracy to launder monetary instruments; and
- Securities fraud.
“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,” U.S. Attorney Justin R. Simmons said.
Simmons said the verdict demonstrates that federal prosecutors will pursue people who prey on the trust of everyday Americans.
IRS Criminal Investigation Special Agent in Charge Christopher J. Altemus Jr. said investigators spent years tracing the money, interviewing witnesses and working with the FBI to identify additional victims.
“Allen and Cox preyed on their closest friends, their community, and many others across the country,” Altemus said. “They took millions of dollars to enrich themselves while devastating lives along the way.”
FBI San Antonio Special Agent in Charge Daniel Faith said the convictions send an important message.
“When someone chooses greed over integrity and abuses the trust of others for illicit personal gain, there are serious consequences,” Faith said.
Allen and Cox each face up to 70 years in federal prison. They were taken into custody immediately after the verdict. Their sentencing hearings have not been scheduled.
Willy is scheduled to be sentenced Dec. 14.
She faces up to 20 years in prison on each of six wire fraud charges, one charge of conspiracy to commit wire fraud and one charge of conspiracy to commit money laundering. She also faces up to 10 years for engaging in monetary transactions involving property derived from wire fraud.
An aggravated identity theft conviction carries a mandatory two-year sentence that must be served consecutively to any other prison term.