A federal jury in Texas convicted two former financial advisors of conspiring with a radio personality on what was labelled as a massive Ponzi scheme, Financial Advisor reported.
Following a weeklong trial, Joshua Allen and Michael Cox, both of Lubbock, were found guilty on all four counts: conspiracy to commit wire fraud, conspiracy to commit money laundering, conspiracy to launder monetary instruments, and securities fraud.
The U.S. Attorney’s Office for the Western District of Texas said that Allen and Cox jointly owned and controlled four investment companies: Ferrum Capital LLC, Ferrum II LLC, Ferrum III LLC, and Ferrum IV LLC.
The indictment stated that Allen and Cox conspired with Brooklynn Chandler Willy of San Antonio, a financial advisor who was also a personality on KTSA radio and hosted the Texas Financial Advisory Show podcast on iHeart Media. The three, and others acting at their direction, solicited victims to invest in the four entities.
Prosecutors said Allen, Cox and Willy conspired to mislead the victims concerning the security of the investments and concealed their high commissions. Additionally, Allen and Cox lied about the nature of the investments. Investors were told that their money was “safe, secure and collateralized,” according to the indictment.
Hundreds of victims collectively lost millions of dollars, much of which went to pay earlier investor-victims, thereby concealing the scheme and attracting additional victims. Much of the money also directly benefited the co-conspirators themselves.
Willy pleaded guilty in March to ten charges, including six counts of wire fraud, one count of wire fraud conspiracy, one count of money laundering conspiracy, one count of engaging in monetary transactions associated with the scheme, and one count of aggravated identity theft.
“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 R. 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.”
Allen and Cox both face up to 70 years in prison after being convicted. Their sentencing hearings have not yet been scheduled.
Willy’s sentencing hearing is scheduled for Dec. 14. She faces up to 20 years in prison on each of the six wire fraud charges, on the one wire fraud conspiracy charge, and on the one money laundering conspiracy charge. She also faces up to 10 years for engaging in monetary transactions in property derived from the wire fraud scheme and a mandatory minimum of two years in prison for aggravated identity theft, which, by statute, would run consecutive to any other punishment.
Hyman Cotter routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter at (833) 665-0784 or through our online contact form for a no-cost evaluation of your matter.
