On 10 July 2025, the United States Securities and Exchange Commission (US SEC), through Release No. 2025-98, announced that it has filed a civil complaint in the U.S. District Court for the Northern District of Georgia against First Liberty Building & Loan, LLC, a Newnan, Georgia-based lender, and its founder and owner Edwin Brant Frost IV. The action seeks emergency relief in connection with an alleged $140 million Ponzi scheme that defrauded approximately 300 investors over more than a decade.
The complaint alleges that, between 2014 and June 2025, the defendants offered and sold promissory notes and loan participation agreements to retail investors, promising annual returns of between 8% and 18%. Investors were told that their funds would be used to make short-term bridge loans to small businesses, often to be refinanced through Small Business Administration (SBA) or commercial loans. However, according to the US SEC’s findings, a significant portion of the funds was either misused or redirected to pay existing investors, constituting a classic Ponzi structure.
“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, Unfortunately, we’ve seen this movie before – bad actors luring investors with promises of seemingly over-generous returns – and it does not end well.” said Justin C. Jeffries, Associate Director of Enforcement for the US SEC’s Atlanta Regional Office.
The complaint reveals that by 2021, First Liberty was operating at a deficit and was largely dependent on fresh investor inflows to meet its interest obligations. Frost is further alleged to have misappropriated investor money for personal use, including over $2.4 million in credit card payments, $335,000 paid to a rare coin dealer, $230,000 spent on family vacations, and purchases of luxury items such as a Patek Philippe watch and high-value jewellery. Five affiliated entities, First Liberty Capital Partners LLC, First National Investments LLC, MyHealthAI Capital LLC, The Legacy Advisory Group Inc., and The Liberty Group LLC, were named as Relief Defendants, having received proceeds from the alleged fraud without providing value in return.
The US SEC’s complaint charges the defendants with violations of the antifraud provisions of the US Securities Act of 1933 and the Securities Exchange Act of 1934. Without admitting or denying the allegations, both the defendants and the relief defendants consented to the SEC’s request for emergency and permanent relief, with monetary penalties to be determined at a later stage.
This enforcement action is brought under Sections 17(a) and 10(b) of the United States Securities Act and Exchange Act respectively, aligning with the US SEC’s statutory mandate under federal law to protect investors and maintain fair, orderly, and efficient markets.
