SEC Exposes Georgia’s First Liberty Building & Loan in Shocking $140M Ponzi Scheme
Another day, another old-school financial institution playing catch-up with crypto scams—only without the decentralization.
The Hammer Drops
The SEC just unloaded on First Liberty Building & Loan and its owner, charging them with running a $140M Ponzi operation. So much for "trusted" traditional finance.
Paper Trail of Greed
Details are still emerging, but the numbers don’t lie—$140 million siphoned from investors who thought bricks-and-mortar meant safety. Joke’s on them.
Regulators Playing Whack-a-Mole
While DeFi gets flak for volatility, at least its scams are transparent. This? Textbook boomer fraud wrapped in a FDIC-wannabe facade.
Final thought: Maybe blockchain’s immutable ledger wouldn’t have let this slide for years. Just saying.
Allegations against First Liberty: High returns, false promises
According to the SEC’s complaint, from 2014 through June 2025, First Liberty and Frost lured retail investors with promises of high-yield returns of up to 18% through promissory notes and loan participation agreements. Investors were told their funds WOULD be used to make short-term bridge loans to businesses at high interest rates, with the assurance that very few loans had defaulted and that repayments would come from borrowers, often via Small Business Administration or other commercial loans.
However, the SEC alleges that most of these loans did not perform as represented. By 2021, First Liberty was using new investor funds to pay principal and interest to earlier investors, a classic Ponzi scheme structure. The complaint also details Frost’s alleged misappropriation of investor money for personal use, including over $2.4 million in credit card payments, more than $335,000 spent at a rare coin dealer, and $230,000 on family vacations. Frost is also accused of using investor money to make over $570,000 in political donations.
Regulatory response and relief sought
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, charges both First Liberty and Frost with violating antifraud provisions of federal securities laws. Five entities controlled by Frost are also named as relief defendants. The SEC is seeking an emergency asset freeze, the appointment of a receiver for the entities, permanent injunctions, civil penalties, and disgorgement of ill-gotten gains with prejudgment interest.
Without confirming or denying the allegations, Frost and the relief defendants have consented to the SEC’s emergency and permanent relief requests, with monetary remedies to be determined later by the court.
Political and community impact
Frost, a prominent figure in Georgia Republican circles, is known for his political donations and connections. The collapse of First Liberty has sent shockwaves through Georgia’s conservative political network, with many investors recruited via right-wing media and personal connections. The company’s abrupt shutdown in late June left investors and employees in limbo, with First Liberty’s website stating that all operations had been indefinitely suspended.
SEC’s warning to investors
Justin C. Jeffries, Associate Director of Enforcement for the SEC’s Atlanta Regional Office, emphasized the recurring nature of such schemes:
“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.”
The SEC is intensifying its focus on protecting retail investors and prosecuting Ponzi schemes and other affinity frauds, especially those targeting specific communities or leveraging political or religious networks. Investors who believe they may have been affected are encouraged to contact the Georgia Securities Division.
