Court-appointed receiver seeks investor funds
The federal investigation into the Newnan business accused of defrauding investors in a massive Ponzi scheme continues. For the first time. We’re hearing from the man who is working to track down the missing millions linked to the company — First Liberty Building and Loan.
NEWNAN, Ga. – A court-appointed receiver is combing through the financial wreckage of First Liberty Building & Loan, the Newnan-based company accused by federal regulators of orchestrating a $140 million Ponzi scheme that defrauded hundreds of investors.
Greg Hays, the receiver appointed by the court following the Securities and Exchange Commission’s civil lawsuit, allowed media access inside the now-shuttered office of First Liberty. The company officially ceased operations on June 27, and Hays is now tasked with tracking down and recovering missing funds.
<!–>
SEC receivers visit First Liberty Building & Loan
–> <!–>
What they’re saying:
–>
“The records are pretty much in shambles,” Hays said during the walkthrough. “I mean, it’s not well organized at all.”
<!–>
“We’ll be looking at everything to try to understand the story and what happened,” Hays said. “We’re really looking into all the loans that were made and talking to the borrowers and trying to determine what happened to a lot of those loans.”
–>
Hays said he has already removed some company records and will rely heavily on bank statements moving forward.
<!–>
“The company records probably aren’t very reliable,” Hays said. “And so we’ll go just with the bank records that we have and start pursuing recoveries from there.”
–>
SEC lawsuit against First Liberty
<!–>
The backstory:
–>
The SEC filed suit last week against First Liberty and its founder, Edwin Brant Frost IV, alleging that the firm lured approximately 300 investors with promises of high returns through short-term bridge loans. In reality, regulators say most loans defaulted, and the company used incoming investor money to pay earlier investors—hallmarks of a Ponzi scheme.
<!–>
Investigators say Frost misused investor funds for personal expenses, including over $570,000 in political donations, $335,000 to a rare coin dealer, $230,000 on vacations, and $2.4 million in credit card payments. The SEC also alleged that more than $200,000 was spent to rent a vacation home.
–>
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, seeks emergency relief including an asset freeze, expedited discovery, and civil penalties. Frost consented to the SEC’s requests without admitting or denying the allegations.
<!–>
Edwin Brant Frost IV’s pitch
–>
The other side:
<!–>
A promotional video still posted to YouTube shows Frost pitching the company to potential investors. “Hello, I’m Brant Frost with First Liberty Building & Loan…” he says in the clip. The firm targeted Christian and conservative communities, touting its mission to help “mainstream entrepreneurs” finance commercial projects.
–>
Hays has created a website to keep investors informed. “I posted a long letter on my website today, and I’ve emailed to every investor address I have to tell them what I know, what I’ll be working on,” he said.
<!–>
Edwin Brant Frost IV accepts responsibility
–>
The other side:
<!–>
In a statement released through his attorney, Frost accepted responsibility.
–>
“I take full responsibility for my actions and am resolved to spend the rest of my life trying to repay as much as I can to the many people I misled and let down,” Frost said. “I will be cooperating with the receiver and federal authorities.”
<!–>
Hays is expected to file a full report with the court within 90 days.
–>
Returning campaign contributions
<!–>
Local perspective:
–>
Georgia Secretary of State Brad Raffensperger also weighed in on the fallout, urging political candidates and PACs to return campaign contributions received from First Liberty, Frost, or related entities.
<!–>
“Now is the time for every elected official, candidate, or political action committee who received financial support from this entity currently under investigation to stand up and help the victims,” Raffensperger said Monday. “Ill-gotten gains do not belong in the State Capitol.”
–>
The Source: FOX 5’s Tyler Fingert spoke with Greg Hays, the receiver appointed by the court following the Securities and Exchange Commission’s civil lawsuit, for this article. Previous FOX 5 Atlanta reporting was also used.