Top Georgia Political Donor Allegedly Ran Ponzi Scheme

A prominent Georgia Republican was running a Ponzi scheme that defrauded 300 investors of at least $140 million, federal officials alleged in a complaint filed Thursday. The civil lawsuit by the US Securities and Exchange Commission said First Liberty Building and Loan, controlled by Brant Frost IV, lied to investors about its business of making high-interest loans to companies. Instead, investigators said, it raised more money to repay earlier investors.

• Frost is alleged to have taken more than $19 million of investor funds for himself, his family, and affiliated companies even as the business was going broke, spending $160,000 on jewelry and $335,000 with a rare coin dealer, the AP reports. Frost is also said to have spent $320,000 to rent a vacation home over multiple years in Kennebunkport, Maine. The SEC said Frost kept writing checks even after the commission began its investigation.

• 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, where the company is based, and is a former second vice-chair of the state Republican Party. Daughter Katie Frost is Republican chairwoman of the 3rd Congressional District, which includes Coweta County. They were both active in the far-right Georgia Republican Assembly until the faction recently splintered, the Atlanta Journal-Constitution reports.
• The collapse rocked the religious and political networks that the business drew investors from. 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.
• In recent months, the business advertised heavily on conservative radio shows promising "Wall Street returns for Main Street investors." "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," Justin C. Jeffries, associate director of enforcement for the SEC's Atlanta Regional Office, said in a statement. "Unfortunately, we've seen this movie before—bad actors luring investors with promises of seemingly over-generous returns—and it does not end well."