The U.S. Securities and Change Fee (SEC) says {that a} Georgia man allegedly defrauded 300 traders 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 traders.
In accordance with authorities, between 2014 and June 2025, the agency operated by providing traders 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 traders that the defaulted loans could be repaid by debtors utilizing funds from the Small Enterprise Administration or different business 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 present traders.
The criticism additionally alleges that Frost misappropriated the funds for private use, akin to buying uncommon cash, paying off private debt and occurring holidays. The SEC accuses Frost and First Liberty Constructing & Mortgage of defrauding 300 traders 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 traders suppose twice or perhaps even thrice earlier than investing their cash. Sadly, we’ve seen this film earlier than – dangerous actors luring traders with guarantees of seemingly over-generous returns– and it doesn’t finish effectively.”
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 attempting to repay as a lot as I can to the many individuals I misled and let down. I shall be cooperating with the receiver and federal authorities and ask that everybody enable the receiver time to type issues out and do his greatest to restore the harm I created.”
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