News Summary
First Liberty Building and Loan has been shut down following allegations of running a $140 million Ponzi scheme, defrauding around 300 investors. The SEC has filed a lawsuit against the firm and its founder, accusing them of misusing investor funds instead of generating profits. Investigations reveal that funds were diverted for personal luxuries and political contributions while misleading investors about the company’s financial health. A new lending venture by Frost’s son raises further questions about the family’s future in finance amidst ongoing scrutiny.
Newnan, Georgia — First Liberty Building and Loan has been shut down amid allegations of running a $140 million Ponzi scheme. The Securities and Exchange Commission (SEC) has filed a civil suit against the firm and its founder, Brant Frost IV, contending that the company defrauded approximately 300 investors.
According to the SEC’s allegations, First Liberty improperly used funds from new investors to pay returns to earlier investors, rather than generating legitimate profits through business operations. The company promised high returns, reportedly as much as 18%, to investors who contributed to bridge loans intended for small businesses. However, it is claimed that most of these loans defaulted, leading to significant financial losses.
Brant Frost IV is accused of diverting investor funds for personal expenses, political donations, luxury items, and vacations. These expenditures included over $570,000 allocated for political contributions and the purchase of a $21,000 Patek Philippe watch. The SEC has stated that Frost misrepresented the company’s loan portfolio, misleading investors about the health of their investments.
Amid the investigations, court-appointed receiver S. Gregory Hays has noted that First Liberty’s financial records are in disarray, complicating efforts to uncover the whereabouts of the missing funds. Additionally, the company misleadingly continued to pay interest on loans that had been paid off, creating the illusion that loans were being actively repaid.
Federal investigators are now scrutinizing the political contributions made by Frost and his family. They have urged political recipients to return the funds that were derived from First Liberty financing. Several politicians, including Georgia Secretary of State Brad Raffensperger, have complied with this request and returned the contributions received from the Frost family.
Following the shutdown of First Liberty Building and Loan, Brant Frost IV issued a statement expressing remorse and indicating his willingness to cooperate with authorities. Despite this, he has not admitted any wrongdoing but has agreed to the SEC’s requests for asset freezes and the provision of documents related to the investigation.
Brant Frost IV’s son, Brant Frost V, has since filed paperwork to establish a new lending business called Heartland Capital. This new venture raises questions about the ongoing impact of the allegations on the Frost family’s future in the financial industry.
In addition to activities in Georgia, the Frost family’s political contributions reached several other states, including Alabama, Florida, and Maine. Their donations have included significant sums to prominent figures such as Georgia Governor Brian Kemp and Florida Governor Ron DeSantis.
Political figures who have received contributions from Frost and his family have been warned about the necessity to return these funds as part of the efforts to recover money for investors affected by the alleged scheme. The unfolding situation continues to develop as federal authorities engage with the relevant stakeholders to address the ramifications of the Ponzi scheme allegations against First Liberty Building and Loan.
Deeper Dive: News & Info About This Topic
- Fox 5 Atlanta: First Liberty Ponzi Scheme
- Atlanta Journal-Constitution: Georgia Ponzi Scheme
- ABC News: Federal Investigation
- Wikipedia: Ponzi Scheme
- Encyclopedia Britannica: Ponzi Scheme
