Georgia Republican Accused of $140 Million Ponzi Scheme

A prominent Georgia Republican, Brant Frost IV, has been accused of orchestrating a Ponzi scheme that defrauded 300 investors of at least $140 million. The civil lawsuit, filed by the U.S. Securities and Exchange Commission (SEC), alleges that First Liberty Building and Loan, a company controlled by Frost, misled investors about its high-interest loan business. Instead of investing in loans, the company used new investor funds to repay earlier investors, a classic hallmark of a Ponzi scheme.

Frost is alleged to have misappropriated over $19 million of investor funds for personal use, including spending $160,000 on jewelry, $335,000 with a rare coin dealer, and $320,000 to rent a vacation home in Kennebunkport, Maine. Despite the ongoing SEC investigation, Frost continued to write checks, further complicating the financial situation. First Liberty Building and Loan announced last month that it would cease making loans and paying interest and principal to investors, and the company has since stopped responding to communications.

The collapse of First Liberty has significant implications for the religious and political networks that supported the business. Frost and his family have been influential in state Republican politics, and the scandal could disrupt funding for far-right candidates. Investigators revealed that Frost spent $570,000 from investor funds on political contributions, highlighting the intertwined nature of the business and political activities.

The SEC's complaint indicates that First Liberty had only $2.67 million in cash as of May 30, leaving 300 investors with an average loss of nearly $500,000 each. The company promised investors high rates of return, up to 16% on loans with an 18% interest rate, and heavily advertised on conservative radio shows. However, the SEC warns that such high returns should be a red flag for potential investors.

First Liberty claimed to make loans to companies awaiting conventional loans from the U.S. Small Business Administration, but the SEC alleges that as many as 90% of these companies have defaulted. By 2021, the company was operating as a Ponzi scheme, with Frost withdrawing increasing amounts of money. The business is also under investigation by the Georgia secretary of state for potential securities law violations. The state encourages any victims to contact the Securities Division for assistance.

Federal prosecutors have not commented on whether they are considering criminal charges, but it is not uncommon for both SEC civil cases and federal criminal cases to be filed in investment frauds. Frost has been a key figure in Georgia politics since 1988, coordinating televangelist Pat Robertson’s Republican presidential bid in the state. His children, Brant Frost V and Katie Frost, hold significant positions within the state Republican Party, further complicating the political fallout from this scandal.