GA Ponzi Scheme Stole $140M From 300 Investors, SEC Says

NEWNAN, GA — Federal authorities say they have charged a Georgia-based mortgage lender with defrauding about 300 investors out of at least $140 million in a Ponzi scheme.

The Securities and Exchange Commission on Thursday announced charges against First Liberty Building and Loan, LLC in Newnan and founder-owner Edwin Brant Frost IV.

First Liberty was accused of violating the antifraud provisions of the federal securities laws. Authorities said they are seeking an asset freeze, emergency relief against the lender and other penalties.

The complaint was filed in the U.S. District Court for the Northern District of Georgia.

Five entities under Frost's leadership were named relief defendants, the SEC said. The allegations against all defendants span 11 years.

The SEC said from about 2014 through June, First Liberty and Frost sold promissory notes and loan participation agreements to retail investors. The agreements offered returns of 18 percent at most "by representing that investor funds would be used to make short-term bridge loans to businesses at relatively high interest rates," the SEC said.

First Liberty and Frost were then accused of telling investigators that few of the loans were default and would be repaid by borrowers from the Small Business Administration or other commercial loan programs.

The SEC said some of the investor funding was used to establish bridge loans, and when the loans "did not perform as represented," most of them defaulted and interest payments were stopped.

"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 SEC said.

Frost was also accused of making $570,000 in political contributions with investor money, the Atlanta Journal-Constitution reported.

First Liberty was listed as permanently closed on Friday. A message on its website read as follows:

"We regret to inform you that as of Friday, June 27, 2025, First Liberty has ceased all business operations. First Liberty will no longer be accepting promissory note investments or bridge loan participations, and it will not be making any new bridge loans. Interest payments on existing promissory notes, bridge loan participation interests and other investment programs are indefinitely suspended. 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. First Liberty hopes to provide additional information and updates in the near future regarding the status of the company's efforts to effectuate an orderly wind-up of the business."

In a statement to the AJC, Frost said he wants to “apologize personally to those I have harmed” but cannot do so.

“I take full responsibility for my actions and am resolved to spend the rest of my life trying to repay as much as I can to the many people I misled and let down,” he said in the statement, per the AJC. “I will be cooperating with the receiver and federal authorities and ask that everyone allow the receiver time to sort things out and do his best to repair the damage I created.”

Emergency relief sought against First Liberty and Frost consists of freezing assets, appointing a receiver over the entities and granting an accounting and expedited discovery.

Furthermore, the SEC is seeking permanent injunctions and civil penalties against First Liberty and Frost, a conduct-based injunction against Frost and disgorgement of ill-gotten gains with prejudgment interest against the defendants and relief defendants, authorities said.

First Liberty and Frost, and the relief defendants, did not acknowledge or deny allegations in the SEC complaint, authorities said. They added all defendants have agreed to financial remedies that will later be determined in court.

“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.”

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