Secretary of State Fines Darnell $500K in First Liberty Ponzi Scheme

Georgia Secretary of State Brad Raffensperger has issued an emergency order against Timothy Nathaniel Darnell of Powder Springs, barring him from securities activity in Georgia, imposing a $500,000 civil penalty, and referring him for potential criminal prosecution in connection with the collapse of First Liberty Building and Loan, which has a consent judgment identifying it as a Ponzi scheme. 

The enforcement action comes one week after the Secretary of State’s office issued a similar $500,000 fine and criminal referral against Edwin Brant Frost V, a principal figure in the First Liberty case.

The Feb. 24, 2026 Emergency Order to Cease and Desist alleges Darnell violated multiple provisions of the Georgia Uniform Securities Act while recommending First Liberty investments to clients. The Citizen had previously reported his involvement in First Liberty, including links to SEC complaints. 

The order bars Darnell from acting as an agent or investment adviser representative in Georgia and assesses the maximum civil penalty of $500,000.

On the same day, the Securities and Charities Division formally referred the case to Cobb County District Attorney Sonya F. Allen for potential criminal prosecution. The Division also referred the matter to Georgia Insurance Commissioner John F. King because Darnell is licensed with that agency.

“This is our second order of several seeking the maximum civil penalty and criminal referrals,” Raffensperger stated. “Exploiting faith and politics for an affinity fraud warrants the full $500,000 fine. As the Senate adjourned last year before final passage of SB 284, any legislation requiring further action between the chambers did not move forward. As a result, these fines will go to the state rather than directly to the victims unless this legislation is passed. I am once again urging the legislature to pass SB 284 so that Georgians can recover their hard-earned money.”

Senate Bill 284 would allow certain civil penalties collected by the Secretary of State’s office to be directed toward compensating victims rather than deposited into the state’s general fund. Because the bill did not receive final passage before adjournment last year, the $500,000 fine in this case — if ultimately collected — would go to the state unless the legislation is enacted in a future session.

$6.6 million in First Liberty investments alleged

According to the emergency order, Darnell placed 45 individuals into First Liberty investments between December 2020 and June 2025, totaling $6,675,000 in principal. Approximately 60% of those investors were age 60 or older.

The Commissioner’s findings state Darnell received approximately $249,109.94 in commissions related to those investments.

For Lou, a 74-year-old North Georgia widow who told her story to The Citizen, that larger figure boils down to $50,000 — the entirety of her retirement savings.

Lou said she invested in November 2024 after meeting with Darnell in person. She worked 34 years in customer service and said the investment represented everything she had set aside.

“That was everything that you had saved up for?” she was asked.

“Yes,” Lou said.

She said Darnell assured her the investment was protected.

“He said everything was secure… that we would have our money back if anything happened, within 30 days,” Lou said. “Yes, we have it in an email.”

Lou said she accepted a 9% return, believing it was safer than other options and better than what banks were paying at the time.

When First Liberty collapsed in July 2025, she said Darnell called her and told her it would take time, but they would get their money back.

She said that has not happened.

“I never received any interest, either,” Lou said.

Now living on approximately $1,500 per month in Social Security, she said the loss has left her financially exposed.

“No, I’m driving a car that’s about ready to fall apart. My home needs all kinds of repairs. My bills so high,” she said.

Lou said she is frustrated by the lack of criminal charges to date.

“I’m very upset about it. Very upset about it. I think they all need to be prosecuted because to me, it’s just like a murder,” she said.

She said she still struggles to understand how it happened.

“I just can’t understand with somebody with an educated background that was out selling… I think only he cared about what he was getting in return,” Lou said.

Alleged violations

The emergency order alleges Darnell failed to disclose outside business activities, engaged in unapproved private securities transactions, and used off-channel communications with clients.

It further alleges he failed to disclose commissions and made representations to investors that certain investments were “guaranteed,” “secure,” or “guaranteed growth.”

Darnell has 30 days to request a hearing. If no hearing is requested, the order becomes final by operation of law.

A referral does not automatically result in criminal charges. Prosecutors will determine whether charges are warranted.

Further developments will depend on whether Darnell requests a hearing and whether prosecutors pursue prosecution.