The U.S. Securities and Exchange Commission (SEC) has taken action against First Liberty Building & Loan, LLC, a lending institution in Georgia, and its owner, Edwin Brant Frost IV, for allegedly running a Ponzi scheme that defrauded investors of over $140 million.
The SEC’s complaint alleges that First Liberty and Frost promised investors high returns of up to 18% through promissory notes and loan agreements. However, the funds were not used as promised, with new investor money being used to pay earlier investors in a classic Ponzi scheme fashion. Frost is also accused of using investor funds for personal expenses, including credit card payments, rare coin purchases, family vacations, and political donations.
In response, the SEC has filed civil charges and requested an emergency asset freeze against First Liberty and Frost. The relief sought includes injunctions, civil penalties, and the disgorgement of ill-gotten gains. Frost and the relief defendants have consented to the SEC’s requests, with monetary remedies to be determined later.
The impact of First Liberty’s collapse has been felt in the political and community spheres, as Frost was a prominent figure in Georgia Republican circles. Many investors were recruited through right-wing media and personal connections, leaving them in limbo after the company’s sudden shutdown.
The SEC is warning investors to be cautious of promises of high returns, as they could be red flags for fraudulent schemes. The agency is committed to protecting retail investors and prosecuting schemes like Ponzi schemes and affinity frauds. Those who believe they may have been affected are encouraged to contact the Georgia Securities Division for assistance.