SEC charges Georgia’s First Liberty Building & Loan and owner in $140M Ponzi scheme

The US Securities and Alternate Fee (SEC) has filed civil fees and has sought a freezing of emergency property towards First Liberty Constructing & Mortgage, LLC, a credit score establishment based mostly in Newnan, Georgia, and the founder and proprietor of Edwin Brant Frost IV. The SEC claims that the corporate and the proprietor have orchestrated a Ponzi scheme that has cheated round 300 buyers of not less than $ 140 million for greater than ten years.

Allegations towards first freedom: Excessive Returns, False Guarantees

Based on the grievance from the SEC, from 2014 to June 2025, First Liberty and Frost Retail Buyers have discovered with guarantees of a excessive return of as much as 18% by Promesse financial institution notes and mortgage participation agreements. Buyers had been informed that their funds can be used to supply brief -term bridging loans to corporations at excessive rates of interest, with the insurance coverage that only a few loans had been in default and that repayments of debtors would typically be made, typically via Small Enterprise Administration or different business loans.

Nonetheless, the SEC claims that the majority of those loans didn’t carry out as represented. By 2021, First Liberty used new investor funds to pay principal and curiosity to earlier buyers, a standard Ponzi Schemastructure. The grievance additionally offers a element concerning the alleged embezzlement of frost of investor cash for private use, together with greater than $ 2.4 million in bank card funds, greater than $ 335,000 spent on a uncommon coinquiser and $ 230,000 on household holidays. Frost can be accused of utilizing investor cash to earn greater than $ 570,000 in political donations.

Common response and project

The grievance of the SEC, submitted to the American courtroom for the northern district of Georgia, accuses each first freedom and prince with the violation of antifraud provisions of federal securities legal guidelines. 5 entities which can be checked by Frost are additionally talked about as help. The SEC is in search of a freezing of an emergency property, the appointment of a recipient for the entities, everlasting orders, civil fines and denial of unlawfully obtained revenue with Overjures curiosity.

With out confirming or denying the allegations, Frost and the auxiliary sources have agreed to the emergency and everlasting requests for assist, the place financial treatments have to be decided by the courtroom later.

Political and group affect

Frost, a distinguished determine in Republican circles in Georgia, is thought for its political donations and connections. The collapse of First Liberty has despatched shock waves via the conservative political community of Georgia, with many buyers recruited via proper -wing media and private connections. The abrupt closure of the corporate on the finish of June left buyers and workers in Limbo, with the web site of First Liberty said that every one actions had been suspended indefinitely.

Sec’s warning to buyers

Justin C. Jeffries, related director of enforcement for the Regional Workplace of the SEC, emphasised the recurring nature of such schemes:

“The promise of a excessive return on an funding is a pink flag that every one potential buyers must assume twice or perhaps even 3 times earlier than they make investments their cash. Sadly, now we have beforehand seen this movie who lure buyers with guarantees of apparently beneficiant returns and it doesn’t finish nicely.”

The SEC strengthens its deal with defending retail buyers and prosecuting Ponzi schemes and different affinity fraud, specifically these aimed toward particular communities or using political or non secular networks. Buyers who imagine they might have been affected are inspired to contact the Georgia Securities Division.