News Summary
The Alabama Securities Commission has launched an inquiry into First Liberty Building and Loan over allegations of a large Ponzi scheme. Owner Edwin Brant Frost IV is at the center of the investigation, which follows a lawsuit from the SEC claiming he fraudulently raised $140 million and misappropriated investor funds. Alabama Secretary of State has urged politicians who received contributions from Frost to return them. As investigations progress, the potential impact on both investors and political entities may unfold in the coming months.
Montgomery, Alabama – The Alabama Securities Commission (ASC) has initiated an inquiry into First Liberty Building and Loan amid allegations of an extensive Ponzi scheme. Edwin Brant Frost IV, the owner of First Liberty, is at the center of this investigation conducted by federal prosecutors. The ASC aims to safeguard Alabama investors while monitoring developments closely.
Amanda Senn, the ASC director, clarified that this inquiry is not yet a formal investigation, but rather a precautionary step to ensure the protection of the state’s investors. Should further legal actions occur in Georgia regarding this case, the ASC is prepared to escalate the inquiry to an active investigation. The inquiry follows a lawsuit filed by the U.S. Securities and Exchange Commission (SEC), which alleges that Frost and his investment firms fraudulently raised at least $140 million between 2014 and 2025.
The SEC’s lawsuit outlines serious allegations against Frost, including the misappropriation of $570,000 in investor funds, which were allegedly used for political donations. Campaign finance records indicate that Frost and his companies contributed over $132,000 to various Alabama politicians and political action committees (PACs), involving figures such as former Representative Andrew Sorrell, Representative Ben Harrison, and Board of Education member Allen Long. In light of these findings, Alabama Secretary of State Wes Allen has urged politicians who received funds from Frost to return those contributions.
While Sorrell and Harrison have agreed to return their contributions, Allen Long has not responded to inquiries regarding the matter. The total number of Alabama investors affected by the alleged Ponzi scheme remains uncertain; however, Senn acknowledged that there are indeed investors from Alabama who have been impacted. Reports indicate that around 300 investors are collectively out approximately $140 million, averaging close to $500,000 lost per individual.
A receiver has been appointed in Georgia to oversee the retrieval of contributions and gather information from investors. This step has been taken in light of Frost’s public acknowledgement of responsibility for his actions, along with an expressed commitment to repay those affected. The downfall of First Liberty has raised alarms about the financial support of far-right candidates associated with the Frost family in both Alabama and Georgia.
Investigators assert that Frost utilized funds from investors to finance personal expenses, including vacations and luxury items, in addition to making political donations. In response to these actions, the SEC has frozen both Frost’s personal and corporate assets while also appointing a financial consultant to manage the recovery efforts for the defrauded investors’ funds. Notably, it has been reported that Frost continued to solicit new investments even after conversations with investigators prompted serious concerns about the legitimacy of his operations.
The alleged Ponzi scheme included fraudulent representations to investors regarding high-interest loans administered by First Liberty, many of which were reportedly not repaid. Contributions from the Frost family and their associated entities have played a significant role in financing political candidates, particularly within Republican circles, both locally and nationally.
Frost IV’s political engagement spans back to 1988, and he has faced scrutiny regarding the origins of funding linked to his investment firm. As investigators delve deeper into this matter, the repercussions for both investors and political entities associated with Frost are likely to unfold in the coming months.
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