The Ferrum Capital Lawsuit: Unraveling the Multi-Million Dollar Investment Fraud
The lawsuit did not go to a full jury trial. In , the parties announced a confidential settlement. While the terms were sealed, several sources close to the matter (including anonymous comments to Bloomberg Law and Law360 ) indicated:
Unbeknownst to these investors, the underlying business model was already failing. Collins Asset Group was not generating anywhere near enough legitimate collection revenue to sustain the promised returns. Instead, the enterprise relied entirely on 2021 incoming funds to pay off earlier pools of investors. The Legal Avalanche: Civil Lawsuits and Bankruptcy Fraud ferrum capital lawsuit 2021
Ferrum Capital LLC (alongside its subsequent iterations Ferrum II, III, and IV) was founded in 2017 by Joshua Allen and Michael Cox. The firm pitched an alternative investment strategy focused on "distressed debt".
The 2021 investment was just one thread in a much larger legal tapestry. In late 2023, Ferrum Capital defaulted on its obligations, and the lawsuits began hitting court dockets in earnest. Within months, a Texas judge had placed Ferrum under receivership — wresting control of the company away from its founders. Collins Asset Group was not generating anywhere near
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.
Cox filed for bankruptcy in February 2024 in Lubbock, listing nearly 400 people or businesses to whom he owed money — most for "loan to Ferrum Capital." The amounts ranged from $10,000 to $2.5 million, adding up to $59 million. However, victims have filed their own claims, bringing the total closer to $69 million — and some estimates go even higher. Cox listed assets of about $1.2 million. The firm pitched an alternative investment strategy focused
Versus filed the lawsuit on April 9, 2021, seeking a temporary restraining order (TRO) against Ferrum. The complaint painted a picture of a classic “loan-to-own” scheme:
According to court documents, the plaintiff alleges that Ferrum Capital:
Price also revealed that more than 70 of his clients have lost millions, and a forensic analysis suggested the total could reach $100 million as the investigation continues. At least 10 people associated with Ferrum Capital could face criminal charges, according to what a federal prosecutor told Price.
The first major class action lawsuit against Ferrum Capital was filed in Bexar County, Texas. A consolidated class action lawsuit filed in state court in San Antonio included more than and alleged that Ferrum had collected at least $67 million from investors. The lawsuit filed in Bexar County was seen as a turning point, as it represented the first major, coordinated civil action against the company on behalf of a large group of defrauded investors.