State investigates firm accused of operating scheme

Georgia Secretary of State Brad Raffensperger has launched an investigation into a company accused of operating a Ponzi scheme that bilked investors while funding political campaigns.

The announcement follows a lawsuit filed in mid-July by the U.S. Securities and Exchange Commission (SEC) against Edwin Brant Frost IV and his company First Liberty Building and Loan.

“If you engaged with First Liberty and have not yet submitted a formal complaint with the Securities Division, you are encouraged to do so using the appropriate channels on the Secretary of State’s website,” the state agency said Monday. “Individuals who contact the office will be treated confidentially.”

The agency’s Securities Division regulates the securities industry in Georgia, including investment products.

Raffensperger has already called on politicians to return any campaign contributions from First Liberty or the Frost family, which has been active in state Republican politics.

The SEC lawsuit said Frost used investor funds for more than $570,000 in political contributions. The Georgia Republican Party said last week that it had repaid nearly $37,000 in such income to the court-appointed receiver for First Liberty.

The company raised at least $140 million from about 300 investors, and the lawsuit said Frost also used their money to pay himself and his family at least $5 million.

Raffensperger said his agency was trying to reach First Liberty investors. In addition to asking them to file a complaint, the agency would like them to fill out an online survey to help with the “fact-finding” process.