Georgia Secretary of State calls for return of campaign funds linked to Ponzi scheme

ATLANTA - Georgia Secretary of State Brad Raffensperger is calling on candidates and political committees to return any campaign contributions received from First Liberty Building & Loan, the Frost family, or affiliated entities now under investigation for allegedly defrauding hundreds of investors in a massive Ponzi scheme.

Raffensperger on First Liberty Building & Loan

What they're saying:

"Now is the time for every elected official, candidate, or political action committee who received financial support from this entity currently under investigation to stand up and help the victims," Raffensperger said in a statement Monday. "Ill-gotten gains do not belong in the State Capitol."

The statement follows a federal civil complaint filed by the Securities and Exchange Commission last week against First Liberty and its founder, Edwin Brant Frost IV. The SEC alleges that Frost misled investors for more than a decade, promising returns as high as 18% on investments supposedly used for short-term business loans. Regulators say those loans largely defaulted, and the company began using new investor funds to pay off old ones in a classic Ponzi scheme.

Raffensperger also encouraged victims to contact the Securities Division of his office. "If you’ve done business with First Liberty and suffered a financial loss, contact our office immediately," he said. "We take allegations of financial fraud seriously, especially when it puts hardworking Georgians at risk."

Dig deeper:

The SEC alleges more than $570,000 of investors' income was used for political donations. According to OpenSecrets.org, Edwin Brant Frost IV has donated multiple times to two Republican candidates and to the Republican Party of Georgia since 2019. One of those candidates returns nearly two-thirds of those donations in 2024 after failing to secure a spot in their primary. 

Ponzi scheme accusations

What we know:

The SEC says about 300 investors were defrauded out of $140 million, with millions allegedly diverted to Frost’s personal expenses — including $2.4 million in credit card payments, $335,000 to a rare coin dealer, and $230,000 on family vacations. First Liberty officially ceased operations on June 27 and has agreed to cooperate with a court-appointed receiver to liquidate assets.

Victims and their advocates have voiced outrage over the scope and nature of the alleged fraud. "Sad that someone would use someone’s faith in God and faith in our country to steal their money," said Texas attorney Jim Clancy, who represents several victims. Others, like Marcy Walker, say families have been devastated. "These were families’ life savings. I know one family that may not even be able to send their kids back to the schools that they’ve chosen because they’ve lost so much money."

First Liberty marketed heavily to conservative and Christian audiences. In one promotional video, Frost described the company as helping "mainstream entrepreneurs to buy, build and grow things for virtually any kind of commercial project."

"It is horrible to take people’s money in the name of patriotism, in the name of Jesus," Walker said.

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The other side:

The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, seeks emergency relief, including an asset freeze and civil penalties. Frost, without admitting or denying the allegations, consented to the SEC’s requests. His attorney, Joshua A. Mayes, released a statement on Frost’s behalf:

"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. I will be cooperating with the receiver and federal authorities," Frost said. "While I do not deserve it, I am grateful for the support of friends and family as I confront this situation I created."