Georgia Republican defrauds 300 investors in $140 million Ponzi scheme

In 2021, Edwin Brant Frost IV, a prominent political figure in Georgia, was accused of running a Ponzi scheme through his company, First Liberty Building and Loan. The U.S. Securities and Exchange Commission (SEC) initiated a civil lawsuit against him, alleging that he defrauded 300 investors out of more than $140 million. Federal officials claim that Frost misrepresented his company’s business practices, which involved promising high returns on loans that were in fact not being funded appropriately. While Frost claimed to be making legitimate business loans, the truth was that up to 90% of these loans were defaulting, and most interest and principal payments were being sourced from new investor funds, typical of Ponzi schemes. Frost reportedly misappropriated substantial investor funds, using them for political contributions and personal expenditures, including a lavish vacation rental and a luxury watch. The SEC has highlighted that the promise of high returns is often a red flag for potential investors, referencing Frost's practices which included advertisements targeting individuals looking for better investment opportunities. Additionally, investigations are ongoing by both the SEC and the Georgia Secretary of State, as authorities explore potential legal actions against Frost in connection to this elaborate fraud. The consequences of his actions have drawn attention not only from federal regulators but also from political circles in Georgia, where Frost has been a significant figure since the 1980s, having previously coordinated political campaigns and backed various Republican candidates.