‘It’s just devastating news’: Georgia investigator begins looking into alleged Ponzi scheme

ATLANTA, Ga. (Atlanta News First) - Secretary of State Brad Raffensperger is urging any political entity that accepted contributions from a Ponzi scheme allegedly run by a prominent Republican to return those contributions to a court-appointed receiver.

In a civil lawsuit filed last week by the U.S. Securities and Exchange Commission, federal officials alleged First Liberty Building and Loan, controlled by Brant Frost IV, lied to investors about its business of making high-interest loans to companies. Instead, investigators said, it raised more money to repay earlier investors.

Raffensperger said he returned around $8,400 in political contributions from First Liberty and many other Georgia politicians have done the same.

“We say send the money back, it’s the right thing to do,” Raffensperger said on Wednesday. “This is the right thing to do for hardworking Georgia families that have been financially devastated by this loss.”

Frost is alleged to have taken more than $19 million of investor funds for himself, his family and affiliated companies even as the business was going broke, spending $335,000 with a rare coin dealer and $160,000 on jewelry, including a $20,800 Patek Philippe watch. Frost is also said to have spent $320,000 to rent a vacation home over multiple years in Maine.

The SEC said Frost kept writing checks even after the commission began its investigation.

First Liberty said last month that it would stop making loans and paying interest and principal to investors in those loans. The company said it was not answering phone calls or emails.

The collapse could have ramifications in state Republican politics, cutting off funding to the candidates Frost and his family have favored. Investigators said Frost spent $570,000 from investor funds on political contributions.

The SEC said the business had only $2.67 million in cash as of May 30, although regulators are also seeking to claw back money from Frost and associated companies. With 300 investors out $140 million, that means the average investor put in nearly $500,000.

“We’ll be looking at everything to try to understand the story and what happened,” said S. Gregory Hays, the financial expert appointed by the court to look further into First Liberty and it’s allegedly defrauded clients.

“The records are pretty much in shambles, it’s not well organized at all,” he said. “People will get some money. At this point it’s too early to tell exactly what we will have and what we will recover. These things can take years to unravel.”

Hays is no stranger to investigations of this sort. He’s been a court-appointed receiver since 1992 and has investigated numerous Ponzi schemes. He’s done work for the SEC, Federal Trade Commission and Commodity Futures Trading Commission.

“The victims are just devastated,” Hays said. “I mean, people have lost their life savings and they don’t know what’s happened.”

First Liberty said it made loans to companies that needed cash while they waited for more conventional loans from the U.S. Small Business Administration. It charged high rates of interest — 18% on some loans, according to a document obtained by The Associated Press. First Liberty promised investors equally high rates of return — 16% on the 18% loans.

The company has represented that it is “cooperating with federal authorities as part of an effort to accomplish an orderly wind-up of the business.” The SEC said Frost and his companies agreed to the SEC’s enforcement actions “with monetary remedies to be determined by the court at a later date.”

While the SEC says there were loans to companies, as many as 90% of those companies have defaulted. By 2021, the company was running as a Ponzi scheme, the complaint said, even as Frost withdrew increasing amounts of money.

Frost has been an important player in Georgia politics since 1988, when he coordinated televangelist Pat Robertson’s Republican presidential bid in the state. His son, Brant Frost V, is chairman of the Coweta County Republican Party, where the company is based, and is a former second vice-chair of the state Republican Party. Daughter Katie Frost is Republican chairman of the 3rd Congressional District, which includes Coweta County and other areas southwest of Atlanta.

At last month’s state Republican convention, Katie Frost chaired a nominating committee that recommended delegates reelect state party chairman Josh McKoon. Delegates followed that recommendation, rejecting a number of insurgent candidates.

Raffensperger - widely rumored himself to be considering a bid for governor or U.S. senator in 2026 - is also urging anyone who believes they may have been defrauded by First Liberty Building and Loan to contact the securities division of his office here.

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