Sixty-five former investors were offered a discounted settlement or the opportunity to contest the receiver’s claims in court. The recovery effort is separate from the federal prosecution of Ferrum’s founders.
The court-appointed receiver overseeing Ferrum Capital is trying to recover money from former investors who received more from the Lubbock-based company than they originally invested.
Court records describe those investors as “net winners,” but the label does not mean they knowingly participated in the alleged fraud. They may have been misled like other Ferrum investors. The difference is that they recovered their principal and received additional interest or gains before the company collapsed, while hundreds of other investors allegedly lost money.
Receiver John Patrick Lowe filed claims against 64 people and one trust under the Texas Uniform Fraudulent Transfer Act. The lawsuits sought a combined total of slightly more than $4 million—the amount the receiver calculated the defendants received above their original investments.
Lowe’s attorney, Royal Lea, said the recipients were offered an opportunity to settle by promptly returning 50% of their calculated net gains. Those who declined the offer could defend themselves in court and challenge the receiver’s allegations, calculations or legal theory.
As of March 2026, court records reviewed by Lubbock Lights showed that 16 of the 65 defendants had agreed to settlements. Lea estimated those agreements had recovered approximately $400,000 for the receivership.
Why the receiver wants the money back
The receiver contends Ferrum used money from newer investors to make interest and redemption payments to earlier investors instead of generating those returns through legitimate business activity.
Under that theory, the payments above an investor’s principal were not genuine investment profits. They were transfers of money supplied by later investors, many of whom ultimately suffered losses.
The lawsuits do not seek to recover every dollar the defendants received. They focus on the amount each person allegedly collected above the cash they invested. Someone who invested $100,000 and received $120,000, for example, would have a calculated net gain of $20,000. Under the settlement terms described by Lea, that investor could resolve the receiver’s claim by paying $10,000.
The settlement offer is not a court determination that every recipient is legally liable. Defendants who do not settle retain the right to dispute the receiver’s claims, and the court would decide any unresolved case.
Money collected through the lawsuits becomes part of the Ferrum receivership estate, which was created to preserve and recover assets for investors who lost money. A settlement also does not establish that a former investor knew Ferrum was allegedly operating as a Ponzi scheme.
Federal allegations against Ferrum’s founders
Joshua Allen and Michael Cox jointly owned and controlled Ferrum Capital and three affiliated entities, according to a federal indictment filed in the Western District of Texas.
Federal prosecutors allege Ferrum Capital began selling promissory-note investments in December 2017, promising either quarterly interest payments or an annual return. The indictment says new investor money was used between March 2022 and August 2023 to pay commissions, benefit people associated with Ferrum and redeem notes held by earlier investors.
Approximately $67 million was invested in Ferrum Capital by hundreds of people, the indictment alleges. Prosecutors also contend investors were misled about commissions, collateral, risk and how their money would be used.
Allen and Cox have pleaded not guilty. Their jury trial is scheduled to begin Aug. 10, 2026, in San Antonio, with recent court filings focused on what evidence jurors will be permitted to consider. An indictment contains allegations, not findings of guilt, and both men are presumed innocent unless convicted.
Former financial adviser Brooklynn Chandler Willy, who worked with Allen and Cox, pleaded guilty in March to 10 federal charges. The Justice Department said Willy admitted using investor funds for personal expenses, payments to associates and payments to other investors. Her sentencing is scheduled for September.
Recovery efforts extend beyond former investors
The receiver has also pursued money and property held by Ferrum insiders, related businesses and companies that allegedly received substantial amounts of investor money.
One major target has been Collins Asset Group, an Austin-based purchaser of distressed debt. Receivership filings alleged Ferrum transferred approximately $47.6 million to the company and received about $18 million back before payments stopped. Collins later entered bankruptcy, creating another potential source of recovery through the sale and collection of its debt portfolios.
Those proceedings are separate from the net-winner lawsuits, although money recovered from the different cases could eventually contribute to payments for approved investor claims.
Investors face a September deadline
The Bexar County court overseeing the receivership has now established a centralized process for people seeking a share of recovered assets.
Under the court’s investor-claims order and accompanying form, the receiver must receive investor claims by 5 p.m. Sept. 3, 2026. Filing a claim in the Collins Asset Group bankruptcy or the Michael Cox bankruptcy does not substitute for filing a claim with the Ferrum receivership.
The order applies to people who lost money through promissory notes issued by Ferrum Capital or Ferrum IV. It does not guarantee a payment or specify what percentage of an approved loss will ultimately be recovered.
After the deadline, Lowe will review the claims and prepare a report. Investors will have an opportunity to challenge objections, and unresolved disputes may be presented to the court.
The amount ultimately available will depend on what the receiver recovers from settlements, lawsuits, bankruptcies and other assets—and how much remains after administrative and legal expenses.
