SEC Uncovers $140M Ponzi Scheme Tied to GOP Donor

As part of a broad crackdown, the US Securities and Exchange Commission (SEC) has filed civil charges and requested an urgent asset freeze against Edwin Brant Frost IV, founder of First Liberty Building & Loan.

Frost and First Liberty are accused by the SEC of devising a Ponzi scheme that scammed about 300 investors out of more than $140 million over a ten-year period.

Promises of high returns and a deceptive network

First Liberty reportedly used promissory notes and loan participation agreements to promise investors high returns, up to 18%, between 2014 and June 2025.
The company claimed that the funds would be used to grant short-term bridging loans to companies, via commercial or SBA financing, backed by reliable repayments and low default rates.

However, according to the SEC, most of these loans did not produce the expected results.
Since 2021, the company has been using funds from new investors to repay previous ones, according to a classic Ponzi scheme.

Worse still, according to the indictment, Frost spent investors' funds for personal purposes, including:

• More than $2.4 million in credit cards
• $335,000 at a rare coin dealer
• $230.000 dollars for family vacations
• Over $570,000 donated to politics

The SEC Requests Immediate Measures

The SEC charged Frost and First Liberty with violation of federal securities laws and filed the complaint with the United States District Court for the Northern District of Georgia.
The list of "relief defendants" also includes five other entities under Frost's control.

The agency sought the appointment of a receiver, permanent injunctions, civil penalties, immediate freezing of assets, and the return of the misappropriated funds with interest thereon.

Frost and the other defendants accepted the SEC's demands for emergency and long-term measures, without admitting or denying the allegations. The fines will be decided later by the court.

Frost is a known political donor, well connected to Republican circles in Georgia. Many investors - enlisted through right-wing media or personal networks - were shocked by the company's sudden closure in late June.

According to First Liberty's website, activities are "suspended indefinitely", leaving employees and investors in uncertainty.

Affinity Scams Alert

Justin C. Jeffries, deputy director of the SEC's Atlanta office of Enforcement, warned of the dangers of affinity scams, pointing out that the agency is increasingly committed to protecting private investors, especially those targeted through community, political or religious channels.

"The promise of high returns is a red flag that should make investors think twice or three times before investing. Unfortunately, we have seen this movie before: scammers luring with returns too generous to be true. And it never ends well," said Jeffries.

Anybody who thinks they may have been involved is encouraged to contact the Georgia Securities Division.