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The U.S. Securities and Exchange Commission (SEC) has filed civilian charges and sought an exigency plus frost against First Liberty Building & Loan, LLC, a lending instauration based successful Newnan, Georgia, and its laminitis and owner, Edwin Brant Frost IV. The SEC alleges that the steadfast and its proprietor orchestrated a Ponzi strategy that defrauded astir 300 investors of astatine slightest $140 cardinal implicit much than a decade.
Allegations against First Liberty: High returns, mendacious promises
According to the SEC’s complaint, from 2014 done June 2025, First Liberty and Frost lured retail investors with promises of high-yield returns of up to 18% done promissory notes and indebtedness information agreements. Investors were told their funds would beryllium utilized to marque short-term span loans to businesses astatine precocious involvement rates, with the assurance that precise fewer loans had defaulted and that repayments would travel from borrowers, often via Small Business Administration oregon different commercialized loans.
However, the SEC alleges that astir of these loans did not execute arsenic represented. By 2021, First Liberty was utilizing caller capitalist funds to wage main and involvement to earlier investors, a classical Ponzi strategy structure. The ailment besides details Frost’s alleged misappropriation of capitalist wealth for idiosyncratic use, including implicit $2.4 cardinal successful recognition paper payments, much than $335,000 spent astatine a uncommon coin dealer, and $230,000 connected household vacations. Frost is besides accused of utilizing capitalist wealth to marque implicit $570,000 successful governmental donations.
Regulatory effect and alleviation sought
The SEC’s complaint, filed successful the U.S. District Court for the Northern District of Georgia, charges some First Liberty and Frost with violating antifraud provisions of national securities laws. Five entities controlled by Frost are besides named arsenic alleviation defendants. The SEC is seeking an exigency plus freeze, the assignment of a receiver for the entities, imperishable injunctions, civilian penalties, and disgorgement of ill-gotten gains with prejudgment interest.
Without confirming oregon denying the allegations, Frost and the alleviation defendants person consented to the SEC’s exigency and imperishable alleviation requests, with monetary remedies to beryllium determined aboriginal by the court.
Political and assemblage impact
Frost, a salient fig successful Georgia Republican circles, is known for his governmental donations and connections. The illness of First Liberty has sent shockwaves done Georgia’s blimpish governmental network, with galore investors recruited via right-wing media and idiosyncratic connections. The company’s abrupt shutdown successful precocious June near investors and employees successful limbo, with First Liberty’s website stating that each operations had been indefinitely suspended.
SEC’s informing to investors
Justin C. Jeffries, Associate Director of Enforcement for the SEC’s Atlanta Regional Office, emphasized the recurring quality of specified schemes:
“The committedness of a precocious complaint of instrumentality connected an concern is simply a reddish emblem that should marque each imaginable investors deliberation doubly oregon possibly adjacent 3 times earlier investing their money. Unfortunately, we’ve seen this movie before—bad actors luring investors with promises of seemingly over-generous returns—and it does not extremity well.”
The SEC is intensifying its absorption connected protecting retail investors and prosecuting Ponzi schemes and different affinity frauds, particularly those targeting circumstantial communities oregon leveraging governmental oregon spiritual networks. Investors who judge they whitethorn person been affected are encouraged to interaction the Georgia Securities Division.
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