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Matt Cone breaks trust of lenders to serve himself

Good afternoon readers! This update is the second half of the story in Allegiance Bank v. Matthew Cone, the first of our series of updates on this list of nineteen civil actions brought against SBISD Trustee Candidate Matthew T. Cone.

On Monday, we updated you on Mr. Cone's recent defrauding of Allegiance Bank, wherein he sold 50 tons of heavy construction equipment out from under their security agreements protecting loans totaling $657,005.

Mr. Cone made a public statement shortly after we updated you on his unscrupulous actions.

Mr. Cone said Monday, in public remarks to his "weary" supporters in PIPEline and Spring Branch Families PAC, that our update on his past behavior deceiving his lender was a "badge of honor".

Mr. Cone went on to argue against his own confession, codified in legal documents he himself signed, saying "What is coming out of Save SBISD is slanderous [sic], cruel, and illegal. They are not presenting truth".

To be clear, our previous updates have been simple regurgitation of public documents signed by Matt Cone, surfaced at the request of Mr. Cone himself, and his most vocal supporter John Perez. So, whatever Matt, we are just doing what you and Mr. Perez asked the public to do last week.

Moving on with the balance of Allegiance v. Cone.

On Monday, we informed you that:

  • From 2017-2019, Mr. Cone and his related entities rapidly increased their borrowings from Allegiance Bank through a series of promissory notes.

  • In November 2019, with Mr. Cone in default, Allegiance Bank demanded payment of $657,005.

  • With Mr. Cone unable or unwilling to pay, Allegiance Bank demanded surrender of his assets, which Mr. Cone had pledged to Allegiance Bank as collateral.

  • But, Mr. Cone had sold that heavy equipment to a third party “without the bank's knowledge or agreement” as admitted by Mr. Cone in a document signed by him in 2021.

You can read that update in its entirety here.

After defrauding Allegiance Bank with these unauthorized asset sales, Allegiance put Mr. Cone into forbearance.

Forbearance is a process banks use as a final effort to work things out amicably and in good faith with a borrower in distress. The expectation during a forbearance process is for both sides to talk about what they can reasonably deliver, to then codify that payment plan in writing, and meet the goals of the plan. If the goals are not met, there are specific remedies the lender has.

Mr. Cone entered into his first Forbarence Agreement with Allegiance Bank on November 19, 2019. It seems that agreement didn't work out.

...because Mr. Cone entered into a second Forbearance Agreement with Allegiance Bank on May 20, 2020. It also seems that agreement didn't work out.

...because Mr. Cone entered into a third Forbearance Agreement with Allegiance Bank on October 20, 2020. Shockingly, that agreement didn't work out either.

...because Mr. Cone had to enter into a fourth Forbearance Agreement with Allegiance Bank on July 27, 2021:

When doing business, lenders have to strike a balance on the "Trust, but Verify" spectrum to get deals done. But by the time you are on your fourth Forbearance Agreement, and with a history of deceptive collateral management, any competent lender will be firmly on the "Verify" side of that spectrum.

If Allegiance was doing its job, they should have had:

  • real time electronic telemetry on all cash accounts of both the Borrowers and the Guarantors, which included Mr. and Mrs. Cone, personally,

  • weekly credit reports on all Borrowers and Guarantors,

  • weekly revenue estimates and profit and loss reporting for the Borrower, and

  • periodic physical inspections of inventory and equipment of the Borrower and Guarantors.

We could go on, but at this point, Mr. Cone shouldn't have been able to buy a cup of coffee without Allegiance Bank knowing about it.

The Cone’s obligations under the fourth Forbearance agreement were:

  • Pay $20,000 upon execution of the agreement,

  • Make three (3) monthly payments of $10,000 in July 2021, August 2021, and September 2021,

  • Pay the balance due (~$500,000) on October 20, 2021,

  • And to otherwise comply with the provisions of the original loan documents.

Here it is:

In summary, it seems Matt Cone asked his lender for four (4) months to finally pull together the money he owed. To guarantee Mr. Cone’s performance, a series of deminimus payments were scheduled to make sure everybody was acting in good faith.

So, what did Matthew T. Cone, current candidate for SBISD Board of Trustees, do?  He did not comply with the Agreement.

On August 31, 2021, less than six weeks after entering into his fourth forbearance, Mr. Cone was in default:

The demand letter sent to Mr. Cone and his related entities stated, in part:

“Despite Allegiance Bank’s providing you additional time to pay your debt, you have failed to perform the conditions of the current Forbearance Agreement”

Reminder: only the good faith $10,000 payment was due at this point.

According to certified mail return receipts, Mr. Cone and his related entities actually received this notice on September 3, 2021.

We have to say, Allegiance Bank was extraordinarily patient with Matt Cone. They spent years trying to drag this money out of him, gave him chance after chance, workout plan after workout plan. When Mr. Cone’s entity couldn’t make this small $10,000 payment, the lender Allegiance Bank demanded payment from Mr. Cone himself, as the guarantor of the indebtedness.

Mr. Cone and his wife Sally Cone had repeatedly signed personal guaranty agreements for the indebtedness. Their personal responsibility was not in question. These agreements stipulated that Mr. & Mrs. Cone “will not, with out prior written consent of the lender, sell, lease, assign, encumber, transfer, hypothecate or otherwise dispose of all or substantially all of [their personal] assets, or any interest therein”, clause (E) below.

So, with his business in default, and his personal guarantees being called on (again), what did Matt Cone do? Did he write the small $10,000 check to the bank himself to stay on plan like he had repeatedly promised he would?


What did Matt Cone do instead?

He bought a house in Bunker Hill Village.

County records show he closed on his house on September 22, 2021:

And yes, that is Matt and Sally Cone’s house.

Can you imagine the fire drill that happened at Allegiance Bank, when they found out this deadbeat that couldn't scrape $10,000 together to satisfy the first "good faith payment" under his fourth Forbearance Agreement somehow found the money to buy an entire HOUSE? In one of the most expensive zip codes in Texas?

We don't have to imagine the fire drill. We know exactly what happened.

Allegiance Bank filed a thermonuclear lawsuit on Mr. Cone THAT NIGHT:

The lawsuit sought to collect the balances due on three promissory notes and guaranty agreements executed by Defendants MCSC HOLDINGS, LLC, MATTHEW T. CONE, SALLY H. CONE.  Allegiance Bank sought recovery from Defendants of the balances due, attorney fees and costs. In total, Allegiance Bank asked the court for over $600,000.

And they got every penny.

The Judgement reads that Matt Cone and his affiliated entities “are indebted to Plaintiff ALLEGIANCE BANK for the principal sum of $524,951.22, plus interest and attorney’s fees, and that judgment should be entered in favor of Plaintiff ALLEGIANCE BANK ….”

The Court ordered that “Plaintiff ALLEGIANCE BANK TEXAS have and recover against Defendants MCSC HOLDINGS, LLC, MATTHEW T. CONE, SALLY H. CONE, ET. AL... (1) Damages in the unpaid principal sum of $524,951.22 together with unpaid accrued interest... in the sum of $72,233.97 and interest thereafter... (2) Attorney’s fees in the sum of at least $33,362.39...

This award totaled $630,546.

Matt Cone made a choice in September 2021.  Despite all the grace and trust extended to him by his creditors, Mr. Cone decided to break that trust and not make a simple $10,000 good faith payment as agreed.  This was the second time that we know about that he broke the trust of his creditors in this single case. Remember, he sold their collateral out from under them two years earlier.

As John Perez said in his re-endorsement of Matt Cone last week, “remember, you are electing a Trustee.”

Has Matt Cone shown he is the type of individual SBISD can trust? Not to us. Not with these dishonest actions.

Stay tuned, we have many more updates to come. If you want to remain informed, subscribe and follow us on Twitter if you haven't already.

Plaintiffs Petition
Download PDF • 536KB

Plaintiffs Exhibits
Download PDF • 19.19MB

signed judgement
Download PDF • 1.41MB


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