🕵️♂️ The Scheme Unveiled
From 2014 to June 2025, First Liberty Building & Loan, led by Edwin Brant Frost IV, promised investors up to 18% returns through promissory notes and loan participation agreements. The idea was to fund short-term bridge loans to businesses, which would supposedly be repaid via SBA or other commercial loans. But the reality was far from the promise.
While some loans were made, they didn't perform as advertised. By 2021, First Liberty had devolved into a classic Ponzi scheme, using new investor money to pay off existing ones. Frost’s personal spending spree included $2.4 million in credit card payments, $335,000 to a rare coin dealer, and $230,000 on family vacations.
“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 of the SEC’s Atlanta Regional Office.
🚨 SEC Steps In
The SEC isn't just rolling over. They've filed charges seeking asset freezes and other emergency relief against Frost and First Liberty. The complaint alleges violations of antifraud provisions and names five entities controlled by Frost as relief defendants.
The legal action includes requests for permanent injunctions, civil penalties, and disgorgement of ill-gotten gains. The SEC is also pushing for a receiver to be appointed over the entities, ensuring that the funds are accounted for and that expedited discovery occurs.
Without admitting or denying the allegations, Frost and the relief defendants have consented to the SEC’s demands. Monetary remedies will be determined later by the court.
🔍 The Investigation
The SEC’s investigative team, led by Justin Delfino and Tiffany Kunkle, and supervised by Peter Diskin and Justin C. Jeffries, worked diligently to uncover the fraud. The litigation is being spearheaded by Kristin Murnahan and Graham Loomis.
This case serves as a reminder that the SEC is always on the lookout for fraudulent schemes and will take decisive action to protect investors. As Jeffries aptly put it, “Unfortunately, we’ve seen this movie before - bad actors luring investors with promises of seemingly over-generous returns – and it does not end well.”
