Federal officials say a prominent Georgia Republican was running a $140 million Ponzi scheme

NEWNAN, Ga. (AP) — A salient Georgia Republican was moving a Ponzi strategy that defrauded 300 investors of astatine slightest $140 million, national officials alleged successful a ailment filed Thursday.

The civilian suit by the U.S. Securities and Exchange Commission said First Liberty Building and Loan, controlled by Brant Frost IV, lied to investors astir its concern of making high-interest loans to companies. Instead, investigators said, it raised much wealth to repay earlier investors.

Frost is alleged to person taken much than $19 cardinal of capitalist funds for himself, his household and affiliated companies adjacent arsenic the concern was going broke, spending $160,000 connected jewelry and $335,000 with a uncommon coin dealer. Frost is besides said to person spent $320,000 to rent a abrogation location implicit aggregate years successful Kennebunkport, Maine, the municipality wherever the household of precocious president George H. W. Bush famously spent summers.

The SEC said Frost kept penning checks adjacent aft the committee began its investigation

First Liberty said past period that it would halt making loans and paying involvement and main to investors successful those loans. The institution said it was not answering telephone calls oregon emails.

First Liberty has not responded to an email seeking comment, and nary 1 was contiguous astatine its bureau Thursday evening successful Newnan, a suburb southwest of Atlanta. A lawyer who acts arsenic the company's registered cause for firm purposes said earlier that helium had nary information.

The illness rocked the spiritual and governmental networks that the concern drew investors from. It besides could person ramifications successful authorities Republican politics, cutting disconnected backing to the far-right candidates that Frost and his household person favored. Investigators said Frost spent $570,000 from capitalist funds connected governmental contributions.

The SEC said the concern had lone $2.67 cardinal successful currency arsenic of May 30, though regulators are besides seeking to claw backmost wealth from Frost and associated companies. With 300 investors retired $140 million, that means the mean capitalist enactment successful astir $500,000.

First Liberty said it made loans to companies that needed currency portion they waited for much accepted loans from the U.S. Small Business Administration. It charged precocious rates of involvement — 18% connected immoderate loans, according to a papers obtained by The Associated Press. First Liberty promised investors arsenic precocious rates of instrumentality — 16% connected the 18% loans.

In caller months the concern advertised heavy connected blimpish vigor shows promising “Wall Street returns for Main Street investors.”

“The committedness of a precocious complaint of instrumentality connected an concern is simply a reddish emblem that should marque each imaginable investors deliberation doubly oregon possibly adjacent 3 times earlier investing their money,” Justin C. Jeffries, subordinate manager of enforcement for the SEC’s Atlanta Regional Office, said successful a statement.

The institution has represented that it is “cooperating with national authorities arsenic portion of an effort to execute an orderly wind-up of the business.” The SEC said Frost and his companies agreed to the SEC's enforcement actions “with monetary remedies to beryllium determined by the tribunal astatine a aboriginal date.”

While the SEC says determination were loans to companies, arsenic galore arsenic 90% of those companies person defaulted. By 2021 the institution was moving arsenic a Ponzi scheme, the ailment said, adjacent arsenic Frost withdrew expanding amounts of money.

The concern is being investigated by the Georgia caput of authorities for imaginable violations of securities instrumentality said Robert Sinners, a spokesperson for the office.

A 2023 papers obtained by the AP is titled arsenic a “promissory note,” and Sinners said anyone issuing promissory notes is expected to beryllium registered with Georgia securities officials.

Sinners encouraged immoderate victims to interaction the authorities Securities Division.

Federal prosecutors person declined to remark connected whether they are considering transgression charges. Sometimes some an SEC civilian lawsuit and a national transgression lawsuit are filed implicit concern frauds.

Frost has been an important subordinate successful Georgia authorities since 1988, erstwhile helium coordinated televangelist Pat Robertson’s Republican statesmanlike bid successful the state. His son, Brant Frost V, is president of the Coweta County Republican Party, wherever the institution is based, and is simply a erstwhile 2nd vice-chair of the authorities Republican Party. Daughter Katie Frost is Republican president of the 3rd Congressional District, which includes Coweta County and different areas southwest of Atlanta.

At past month’s authorities Republican convention, Katie Frost chaired a nominating committee that recommended delegates reelect authorities Party Chairman Josh McKoon. Delegates followed that recommendation, rejecting a fig of insurgent candidates.