News Summary
The Alabama Securities Commission (ASC) is investigating Edwin Brant Frost IV and First Liberty Building and Loan amid Ponzi scheme allegations. The U.S. SEC alleges Frost raised $140 million from investors through fraudulent means, misappropriating funds for political donations. The ASC is monitoring the situation to protect investors, with some politicians already agreeing to return contributions linked to Frost. The inquiry may escalate to a full investigation as more details emerge regarding the impact on Alabama investors.
Birmingham, Alabama — The Alabama Securities Commission (ASC) is currently conducting an inquiry into First Liberty Building and Loan and its owner, Edwin Brant Frost IV, amid allegations of a Ponzi scheme. This action comes after a lawsuit was filed against Frost by the U.S. Securities and Exchange Commission (SEC), which accuses him of raising at least $140 million from investors through fraudulent means from 2014 to 2025.
Amanda Senn, the ASC director, clarified that the inquiry is intended to monitor the ongoing situation to ensure the protection of Alabama investors. While this is not yet classified as a full-scale investigation, the ASC is closely coordinating with authorities in both Alabama and Georgia. If necessary, the inquiry may escalate to an active investigation in the future.
The SEC’s lawsuit, filed on July 10 in the U.S. District Court for the Northern District of Georgia, outlines several serious allegations against Frost. The commission claims that he misappropriated $570,000 from investors, which he diverted for political donations. Notably, records show that Frost, his family, and associated businesses made contributions totaling at least $132,000 to various Alabama politicians and political action committees (PACs).
Among the recipients of these contributions are several prominent Alabama politicians. For example, former Representative Andrew Sorrell, who is currently the Alabama State Auditor and vying for the position of Secretary of State, received over $71,000 from Frost. Additionally, Representative Ben Harrison (R-Elkmont) accepted more than $21,000, while Alabama State Board of Education member Allen Long received $40,000.
In response to the unfolding situation, Alabama Secretary of State Wes Allen has called for the return of Frost’s contributions to the politicians involved. As of now, both Sorrell and Harrison have indicated that they would comply, returning the contributions to a court-appointed receiver designated to oversee the situation.
The ASC has noted that the number of Alabama investors affected by this alleged Ponzi scheme remains unclear. However, it has been confirmed that there are indeed investors from Alabama impacted by the activities of Frost and First Liberty Building and Loan. A court-appointed receiver in Georgia has been assigned the duty of collecting these political contributions and gathering essential information about the investors.
It is worth noting that although the ASC oversees campaign finance reporting in Alabama, it lacks the authority to investigate or enforce the return of political contributions, which adds a layer of complexity to the process. Should further developments arise in Georgia, the ASC plans to issue subpoenas and may potentially initiate a broader investigation.
The SEC’s lawsuit contends that Frost’s company deceived investors by promising returns as high as 18% under the pretense of making short-term bridge loans, assured by claims that repayments would be facilitated by the Small Business Administration. However, the SEC maintains that the vast majority of investors were never repaid, as previous loans were reportedly offset by payments made from new investors—a characteristic hallmark of a Ponzi scheme.
Additionally, the SEC alleges that Frost used investor funds for personal expenditures that had no legitimate connection to business activities. High-value purchases, such as expensive jewelry and political campaign donations, were funded through the pooled investor resources, highlighting a troubling pattern of mismanagement and fraud.
The inquiry by the ASC emphasizes the agency’s dedication to safeguarding Alabama investors in the face of these serious allegations against Frost and First Liberty Building and Loan. As more facts emerge and the situation unfolds, the ASC remains vigilant in its pursuit of justice and transparency within the Alabama investment landscape.
Deeper Dive: News & Info About This Topic
- Alabama Reflector: Alabama Securities Commission Opens Inquiry
- WSFA: Alabama Leaders Announce Inquiry
- AL.com: Alabama State Auditor Invested in Ponzi Scheme
- Encyclopedia Britannica: Ponzi Scheme
- Google Search: Alabama Securities Commission
