First Liberty Ponzi scheme fallout strikes friends of Brant Frost V

As a reminder, the First Liberty Building and Loan business in Newnan owned by Brant Frost IV collapsed late this summer revealing a $140 million Ponzi scheme that defrauded approximately 300 investors. Brant Frost V was an employee at his father’s business. 

It would seem perfectly normal to recommend the business of one of your best friends to people you know. But not if that business is a Ponzi scheme. And not if you are working as a broker of securities. 

That’s why one of Brant Frost V’s friends just got caught up in the First Liberty Ponzi scheme fallout. Timothy Nathaniel Darnell, who goes by Nathaniel, worked for 7 years at Bankers Life Security Services as a Broker and Investment Advisor. They fired him on September 12.

According to the SEC website, “Mr. Darnell was terminated due to 1. Failure to disclose outside business activities (OBA), 2. Participation in undisclosed and unapproved private securities transactions (PST), 3. Use of off-channel communications with clients, and not following firm policies and procedures related to such.

Additionally, he’s facing a customer dispute that the SEC website describes as follows: “The arbitration alleges the RR made unsuitable recommendations, alleges breach of fiduciary duty, negligence, misrepresentation, and selling away related to an alleged Ponzi scheme with First Liberty Building & Loan, LLC.” 

RR usually means Registered Representative, referring to a stockbroker. 

The damage amount requested in the customer dispute is $1,000,000. 

Just how close were Darnell and Frost V? Darnell stood up for Brant Frost V in his February 8 wedding this year as a groomsman. 

The way the firing and dispute are worded make it sound like Darnell may have participated in selling someone on First Liberty’s false promises, rather than just recommending, but this isn’t clear. 

What is clear is that his friend’s business cost him his job. According to Facebook, Darnell supports a family, including three small children. 

Questions remain why a person whose business sells securities wouldn’t have recognized the risk involved in the First Liberty “investment” opportunity? And how much will Darnell have to pay in damages because of his friendship with Brant Frost V?