SEC Charges Georgia Lender, Owner With $140M Ponzi Scheme

The U.S. Securities and Exchange Commission announced that it filed charges seeking an asset freeze and other emergency relief against Newnan, Ga.-based First Liberty Building & Loan LLC and its founder and owner Edwin Brant Frost IV, age 67, in connection with a Ponzi scheme that defrauded approximately 300 investors of at least $140 million.

According to the SEC’s complaint, from approximately 2014 through June 2025, First Liberty and Frost offered and sold to retail investors promissory notes and loan participation agreements that offered returns of up to 18% by representing that investor funds would be used to make short-term bridge loans to businesses at relatively high interest rates. The defendants allegedly told investors that very few of these loans had defaulted and that they would be repaid by borrowers via Small Business Administration or other commercial loans.

Initially, the complaint alleges, defendants solicited and sold these investments to “friends and family” in the form of either loan participation agreements or promissory notes. These agreements and notes offered investors the opportunity to make an investment that would be pooled with other investor funds and then lent to specific borrowers. Beginning in 2024, the complaint said defendants started a more widespread public solicitation of potential investors, advertising the opportunity to invest in promissory notes via radio advertising, internet podcasts, and the First Liberty website.

The complaint also alleges that, while some investor funds were used to make bridge loans, those loans did not perform as represented, and most loans ultimately defaulted and ceased making interest payments. Since at least 2021, First Liberty operated as a Ponzi scheme by using new investor funds to make principal and interest payments to existing investors, according to the complaint. The complaint further alleges that Frost misappropriated investor funds for personal use, including by using investor funds to make over $2.4 million in credit card payments, paying more than $335,000 to a rare coin dealer, and spending $230,000 on family vacations.

“The promise of a high rate of return on an investment is a red flag that should make all potential investors think twice or maybe even three times before investing their money,” said Justin C. Jeffries, associate director of enforcement for the SEC’s Atlanta Regional Office. “Unfortunately, we’ve seen this movie before – bad actors luring investors with promises of seemingly over-generous returns – and it does not end well.”

The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, charges First Liberty and Frost with violating the antifraud provisions of the federal securities laws and names five entities that Frost controlled as relief defendants. The SEC seeks emergency relief, including an order freezing assets, appointing a receiver over the entities, and granting an accounting and expedited discovery. The SEC also seeks permanent injunctions and civil penalties against the defendants, a conduct-based injunction against Frost, and disgorgement of ill-gotten gains with prejudgment interest against the defendants and relief defendants.

Without admitting or denying the allegations in the complaint, the defendants and relief defendants consented to the SEC’s requested emergency and permanent relief, with monetary remedies to be determined by the court at a later date.

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