SEC Charges Georgia-based First Liberty and Owner in $140 Million Ponzi Scheme

The U.S. Securities and Exchange Commission (SEC) has filed emergency enforcement actions against First Liberty Building & Loan, LLC and its founder, Edwin Brant Frost IV, alleging they operated a $140 million Ponzi scheme that spanned more than a decade and defrauded around 300 investors.

Filed on July 10, 2025, in the U.S. District Court for the Northern District of Georgia, the SEC’s complaint claims that from 2014 to June 2025, Frost and First Liberty lured retail investors with promises of returns up to 18%. They marketed promissory notes and loan participation agreements under the guise that the funds would be used to finance short-term bridge loans to businesses at high interest rates. Investors were led to believe that the loans had an excellent repayment track record, often backed by Small Business Administration or other commercial financing.

However, the SEC alleges that the reality was starkly different. Most of the loans underperformed, defaulted, and eventually ceased making payments. Since at least 2021, First Liberty allegedly began functioning as a Ponzi scheme—using new investor capital to pay returns to earlier investors.

The complaint further accuses Frost of misappropriating investor funds for personal enrichment. This included more than $2.4 million in credit card payments, over $335,000 spent on rare coins, and $230,000 used for family vacations.

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“The promise of a high rate of return on an investment is a red flag that should make all potential investors think twice or maybe even three times before investing their money,” said Justin C. Jeffries, Associate Director of Enforcement for the SEC’s Atlanta Regional Office. “Unfortunately, we’ve seen this movie before—bad actors luring investors with promises of seemingly over-generous returns—and it does not end well.”

The SEC is seeking emergency relief including an asset freeze, the appointment of a receiver, a full accounting, and expedited discovery. Permanent injunctions, civil penalties, and disgorgement of ill-gotten gains are also being pursued.

Without admitting or denying the charges, Frost, First Liberty, and the five named relief defendants have agreed to the SEC’s emergency and permanent relief requests. Monetary penalties and other financial remedies will be determined at a later date.

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Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.