State Fines Frost V $500K in First Liberty Ponzi

Georgia Secretary of State Brad Raffensperger has issued an Emergency Order barring Edwin Brant Frost V from securities activity in Georgia, imposing the maximum $500,000 civil penalty, and referring the case for potential criminal prosecution in Coweta County.

The action stems from the collapse of First Liberty Building and Loan, a Newnan-based investment operation that a court determined operated as a Ponzi scheme. Founder Brant Frost IV consented to judgment in the case, and a court-appointed receiver is now collecting and liquidating assets in an effort to recover funds for investors.

Frost V, the son of Frost IV, worked for First Liberty during its operation. He also served as chairman of the Coweta County Republican Party before resigning late last year.

The February 17 Emergency Order concludes that Frost V engaged in unregistered securities activity, made material misrepresentations to investors, and failed to disclose conflicts of interest.

Not registered to sell securities

According to the findings in the 15-page order, Frost V is not registered with the Georgia Securities Commissioner as a broker-dealer agent or investment adviser representative and had never filed to offer or sell securities in Georgia.

Regulators determined he nevertheless engaged in broker-dealer and investment adviser activity and offered and sold unregistered securities in the state, in violation of the Georgia Uniform Securities Act of 2008.

Findings of misrepresentation

The order details multiple instances in which regulators determined Frost V provided false or misleading information to investors.

In one example, the order states Frost V described First Liberty Notes as competitive and lower risk while failing to disclose material risks involving borrowers.

Regulators also found Frost V failed to disclose that he had invested in the same programs and received principal and interest payments, creating a conflict of interest.

The Commissioner further concluded Frost V made unsuitable recommendations and omitted material facts when soliciting investments.

Personally benefited

According to the order, Frost V contacted and solicited approximately 90 people for First Liberty investment opportunities and served as a primary point of contact for many investors.

The order states he received commissions ranging from 1% to 2.5%, approximately $47,000 in bonuses between January 2020 and January 14, 2025, and approximately $88,050 in commissions on loan fees.

It also states he was receiving approximately $4,000 per month in payments from First Liberty as of November 2023.

Barred from securities activity

The Emergency Order directs Frost V to immediately cease and desist from violations of the Georgia Uniform Securities Act.

He is barred from acting as an agent and from acting as an investment adviser representative in Georgia.

The $500,000 penalty must be paid within 30 days of the order’s finalization.

Referrals to prosecutors and regulators

The Securities Division formally referred the matter to Coweta Judicial Circuit District Attorney Herb Cranford for potential criminal prosecution. The case was also referred to Insurance Commissioner John F. King because Frost V is licensed with that agency.

The referrals do not themselves constitute criminal charges.

Push for victim restitution

In a statement released with the order, Raffensperger said:

“This is just the first of many orders we expect to file soon. This imposes the maximum $500,000 fine. Since the Senate adjourned early last year before passing SB 284, this money will be going to the state instead of to the victims. I am once again urging the legislature to pass SB 284 – to allow Georgians to get their hard-earned money back.”

Senate Bill 284 would allow certain civil penalties collected in securities enforcement actions to be directed toward victim restitution rather than solely to the state treasury.

Raffensperger indicated additional enforcement orders related to First Liberty may follow.The Citizen will continue to monitor action by the Coweta County District Attorney, the Insurance Commissioner, and the court-appointed receiver as efforts continue to recover funds for investors.