The U.S. Securities and Alternate Fee (SEC) says {that a} Georgia man allegedly defrauded 300 buyers in a Ponzi scheme after his mortgage enterprise fell aside.
In a brand new press release, the SEC is accusing Edwin Brant Frost IV and his enterprise, First Liberty Constructing & Mortgage, of operating a Ponzi scheme by misappropriating funds and deceptive buyers.
In line with authorities, between 2014 and June 2025, the agency operated by providing buyers promissory notes and mortgage participation agreements with returns of as much as 18% for short-term loans to companies at excessive rates of interest that not often defaulted. Frost and his firm allegedly assured buyers that the defaulted loans could be repaid by debtors utilizing funds from the Small Enterprise Administration or different industrial lenders.
However since 2021, Frost allegedly ran First Liberty Constructing & Mortgage as a Ponzi scheme after most loans defaulted. The SEC accuses Frost of utilizing new investor capital to make principal and curiosity funds to current buyers.
The criticism additionally alleges that Frost misappropriated the funds for private use, similar to buying uncommon cash, paying off private debt and occurring holidays. The SEC accuses Frost and First Liberty Constructing & Mortgage of defrauding 300 buyers to the tune of $140 million.
Says Justin C. Jeffries, Affiliate Director of Enforcement for the SEC’s Atlanta Regional Workplace,
“The promise of a excessive price of return on an funding is a pink flag that ought to make all potential buyers suppose twice or perhaps even 3 times earlier than investing their cash. Sadly, we’ve seen this film earlier than – unhealthy actors luring buyers with guarantees of seemingly over-generous returns– and it doesn’t finish nicely.”
In a statement to Fox Information, Frost admits his involvement and wrongdoing within the scheme and says he’ll cooperate with investigators.
“I take full accountability for my actions and am resolved to spend the remainder of my life making an attempt to repay as a lot as I can to the many individuals I misled and let down. I might be cooperating with the receiver and federal authorities and ask that everybody enable the receiver time to type issues out and do his finest to restore the injury I created.”
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