Georgia Financier Accused of $140 Million Ponzi Scheme Targeting Conservatives

Edwin Brant Frost IV, a politically connected financier from Georgia, has been accused of orchestrating a $140 million Ponzi scheme through his private lending company, First Liberty Building & Loan. The Securities and Exchange Commission (SEC) filed a civil complaint on Thursday in federal court in Atlanta, alleging that Frost and his company have been operating a sophisticated Ponzi scheme since 2014.

The scheme targeted Republican activists and conservative Christian investors, using a network of right-wing media outlets to promote the "Patriot Economy." First Liberty's now-defunct website featured advertisements on conservative media shows hosted by figures such as Erick Erickson, Hugh Hewitt, and Charlie Kirk. The company abruptly shut down late last month, posting a message on its website stating that its investments, payments, and programs were "indefinitely suspended."

According to the complaint, Frost and First Liberty raised at least $140 million from the sale of loan participation agreements and promissory notes to at least 300 investors. The scheme began in 2014 with Frost raising capital through friends and family, initially offering loan participation agreements and later promissory notes. Investors were promised high returns, with the friends and family program offering 14% to 18% returns and the notes an annual return of 8% to 13%.

The SEC alleges that nearly all of these representations were false. In 2021, First Liberty began operating as a Ponzi scheme, with about 80% of the interest and payments to investors sourced from new investor funds. The SEC claims that Frost expanded the financial firm’s reach by offering and selling the promissory notes to the public on the radio, the firm’s website and on podcasts and other programs.

During the alleged scheme, Frost is accused of living lavishly off investors’ assets. He allegedly spent $230,000 to rent a vacation home in Kennebunkport, Maine, and $140,000 on jewelry. He also allegedly purchased a $20,800 Patek Philippe watch with investor money and paid $335,000 to a rare coin dealer. Additionally, he allegedly paid $2.4 million on his credit cards with investor funds and made $570,000 in political donations.

The SEC alleged that nine days after commission staffers interviewed Frost, he withdrew $100,000 from company accounts containing investor funds and wrote $210,875 in checks from company accounts to a business that specializes in selling gold coins. The SEC has frozen Frost’s assets.

First Liberty's message on its website stated, “First Liberty is cooperating with federal authorities as part of an effort to accomplish an orderly wind-up of the business. First Liberty employees are not authorized to make any further communications at this time regarding the ongoing situation, and no one at the company will be available to answer phone calls or respond to email inquiries.”

This case highlights the risks associated with high-yield investment schemes and the importance of thorough due diligence. The SEC's allegations underscore the need for investors to be cautious of promises of overly generous returns and to verify the legitimacy of investment opportunities.