The U.S. Securities and Exchange Commission (SEC) has filed civil charges and sought an emergency asset freeze against First Liberty Building & Loan, LLC, a lending institution based in Newnan, Georgia, and its founder and owner, Edwin Brant Frost IV. The SEC alleges that the firm and its owner orchestrated a Ponzi scheme that defrauded approximately 300 investors of at least $140 million over more than a decade.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, charges both First Liberty and Frost with violating antifraud provisions of federal securities laws. Five entities controlled by Frost are also named as relief defendants. The SEC is seeking an emergency asset freeze, the appointment of a receiver for the entities, permanent injunctions, civil penalties, and disgorgement of ill-gotten gains with prejudgment interest.
Without confirming or denying the allegations, Frost and the relief defendants have consented to the SEC’s emergency and permanent relief requests, with monetary remedies to be determined later by the court.
Justin C. Jeffries, Associate Director of Enforcement for the SEC’s Atlanta Regional Office, emphasized the recurring nature of such schemes:
“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. 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 is intensifying its focus on protecting retail investors and prosecuting Ponzi schemes and other affinity frauds, especially those targeting specific communities or leveraging political or religious networks. Investors who believe they may have been affected are encouraged to contact the Georgia Securities Division.
