Georgia Republican apologizes for $140M Ponzi scheme as judge freezes assets
Brant Frost IV said in a statement issued through his lawyers that he 'would like to apologize personally to those I have harmed, but I am under restrictions which prevent me from doing so.'
'I take full responsibility for my actions and am resolved to spend the rest of my life trying to repay as much as I can to the many people I misled and let down,' Frost said in the statement. 'I will be cooperating with the receiver and federal authorities and ask that everyone allow the receiver time to sort things out and do his best to repair the damage I created.'
The U.S. Securities and Exchange Commission said in a civil lawsuit filed Thursday that First Liberty Building and Loan, controlled by Frost, lied to investors about its business of making high-interest loans to companies. Instead, investigators said that its loans mostly went sour and that it then raised more money to repay earlier investors, while Frost skimmed millions for himself and his family.
The firm's collapse rocked the religious and political networks that fed cash to the business, based in suburban Newnan, southwest of Atlanta. It also could have ramifications in state Republican politics, cutting off funding to the far-right candidates that Frost and his family have favored. Investigators said Frost spent $570,000 from investor funds on political contributions.
U.S. District Judge Michael Brown on Friday froze Frost's personal and corporate assets, banned him from the securities business, and ordered him to pay back ill-gotten gains with interest and fines. The SEC requested the order and Frost agreed to it without admitting or denying any factual allegations.
The judge also appointed financial consultant S. Gregory Hays as receiver. He will take control of assets, examine the books and try to claw back money. Everyone else is barred, for now, from suing Frost or First Liberty.
The SEC said the business had only $2.67 million in cash as of May 30. With 300 investors out $140 million, that means the average investor put in nearly $500,000.
Frost is alleged to have taken $17 million for himself, his family and affiliated companies, spending $573,000 on political donations to Republicans, $160,000 on jewelry, $20,800 on a Patek Philippe watch and $335,000 to buy gold coins. Frost is also accused of spending $320,000 to rent a vacation home over multiple years in Kennebunkport, Maine, the town where the family of late president George H. W. Bush spent summers.
The SEC said in court papers that Frost kept writing checks and soliciting new investors even after he made 'misrepresentations' when investigators first met with Frost on May 15. Court papers included a June 16 email asking investors to put between $100,000 and $500,000 into a loan to First Liberty itself, claiming the company was developing an AI software system to help banks and credit unions complete loan applications quickly. The company went out of business 11 days later on June 27.
Federal prosecutors have declined to say whether they will seek criminal charges. Sometimes, both an SEC civil case and a federal criminal case are filed over investment frauds. The business is also being investigated by the Georgia secretary of state for possible violations of securities law.
First Liberty said it made loans to companies that needed cash while they waited for more conventional loans from the U.S. Small Business Administration. It charged high rates of interest — 18% on most loans, prosecutors said. First Liberty promised investors equally high rates of return — 8% to 16%. The company advertised heavily to find new investors over the past year, branching out from the original 'family and friends' approach.
Frost has been an important player in Georgia politics since 1988, when he coordinated televangelist Pat Robertson's Republican presidential bid in the state. His son, Brant Frost V, is chairman of the Coweta County Republican Party and former second vice-chair of the state Republican Party. Daughter Katie Frost is the Republican chairman of the 3rd Congressional District, which includes Coweta County and other areas southwest of Atlanta.
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