: In May 2021, financial advisor Brooklynn Chandler Willy allegedly advised clients to invest $500,000 into a Ferrum entity.
: Michael Cox filed for bankruptcy in February 2024, claiming he owed nearly 400 people or businesses—most of them for a "loan to Ferrum Capital"—a total of $59 million. Victims in the class action lawsuit have since challenged the bankruptcy. In May 2025, a U.S. Bankruptcy Judge ruled that the promissory notes sold by Ferrum Capital and its entities were unregistered securities and that Cox could not discharge his debt against the roughly 80 plaintiffs in the class action, who are suing him and others for more than $21 million. The receiver for Ferrum has also sued 65 of the company's former investors—so-called "net winners" who made a profit at the front end of the Ponzi scheme—to claw back over $4 million to distribute to the scheme's victims.
Lubbock-based businessmen and Michael Cox founded Ferrum Capital in 2017. Operating under various entities—including Ferrum Capital LLC, Ferrum II, Ferrum III, and Ferrum IV—the firm began aggressively soliciting capital from investors across Texas and the United States.
The case highlights the importance of robust risk management practices, transparent disclosure, and a strong corporate governance structure. As the financial industry continues to evolve, firms like Ferrum Capital must prioritize these elements to maintain the trust of their clients and stakeholders. ferrum capital lawsuit 2021
: Co-founders of Lubbock-based Ferrum Capital (founded in 2017).
Investors alleged that they had entrusted large sums of money to Ferrum Capital to fund specific loans or to act as capital for the company’s lending operations. The lawsuit claimed that instead of using these funds for the intended real estate deals, Ferrum used the money to pay off earlier investors or to cover internal overhead expenses—a classic hallmark of a Ponzi scheme.
in a Ferrum entity. Instead of investing the funds, she reportedly used the money for personal expenses and to pay off other investors—a classic hallmark of a Ponzi scheme. Federal Charges (2025-2026) : In July 2025, Ferrum Capital owners Joshua Allen Michael Cox were indicted alongside : In May 2021, financial advisor Brooklynn Chandler
The legal proceedings surrounding and its principals, Joshua Allen and Michael Cox
Civil lawsuits and federal indictments have painted a clear picture of how the scheme allegedly operated. The core business model was deceptively simple, but the execution was a fraud.
The legal battles in 2021 marked the beginning of the end for Ferrum Capital Partners as a major player in the bridge financing space. The litigation revealed the firm's precarious financial position. In May 2025, a U
Promising high, fixed annual returns between 8% and 10%, the defendants pitched these vehicles as secure, fully backed positions. They told clients that their money was being used strictly by third-party agencies to buy up underpriced, distressed consumer debt portfolios for pennies on the dollar and collect the balances for high margins.
Ferrum Capital filed the lawsuit in in a U.S. federal district court (often the Southern District of New York or a similar venue for financial disputes). The primary claims were:
At the heart of the lawsuit was a dispute over a loan agreement. Omni Partners had extended a significant line of credit to Ferrum Capital, intended to be used for bridge financing for Ferrum’s portfolio companies. According to court filings, Omni Partners alleged that Ferrum Capital defaulted on this credit facility.
Ferrum Capital lawsuits involve allegations that owners Joshua Allen Michael Cox , along with affiliate Brooklynn Chandler Willy , operated a massive Ponzi scheme through various Lubbock-based Ferrum entities