SEC Alleges Georgia-Based First Liberty Building & Loan Operated Ponzi Scheme

The Securities and Exchange Commission (SEC) said Friday (July 11) that it filed charges against Newnan, Georgia-based First Liberty Building & Loan and its founder and owner, Edwin Brant Frost IV, alleging that they operated a Ponzi scheme.

The agency seeks an asset freeze and other emergency relief against First Liberty and Frost, saying they defrauded 300 investors of at least $140 million, the SEC said in a Friday press release.

The First Liberty Building & Loan website carried a message Friday (July 11) saying that the bank ceased all business operations June 27.

“First Liberty is cooperating with federal authorities as part of an effort to accomplish an orderly wind-up of the business,” the message said. “First Liberty employees are not authorized to make any further communications at this time regarding the ongoing situation, and no one at the company will be available to answer phone calls or respond to email queries.”

The SEC’s complaint alleges that from 2014 through June 2025, First Liberty and Frost sold retail investors promissory notes and loan participation agreements that promised returns of up to 18%, according to the release.

It also alleges that the loans First Liberty and Frost made did not perform as represented and that since at least 2021, First Liberty operated as a Ponzi scheme by using new investor funds to pay existing investors, the release said.

In addition, the complaint alleges that Frost misappropriated investor funds for personal use, per the release.

The defendants consented to the SEC’s requested emergency and permanent relief, without admitting or denying the allegations, according to the release. The court will determine monetary penalties.

“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,” Justin C. Jeffries, associate director of enforcement for the SEC’s Atlanta Regional Office, said in the release.

In an earlier, separate case alleging this kind of fraud, the SEC said in March 2024 that it charged 17 individuals connected with Houston-based CryptoFX, alleging that they were involved in a Ponzi scheme.