SEC v. Edwin Brant Frost IV, First Liberty Building & Loan, LLC — U.S. Securities and Exchange Commission Litigation Release No. 26358, dated July 22, 2025.
The SEC charged Edwin Brant Frost IV and his company, First Liberty Building & Loan, LLC, for operating a $140 million Ponzi scheme. They defrauded approximately 300 investors by misrepresenting how their funds would be used for business loans, instead using new investor money to pay existing investors and for personal expenses.
In Plain English
Imagine you give money to a friend who promises to lend it to businesses and give you a big return. Instead, your friend uses money from new people to pay back the earlier people, and also spends some of it on themselves. This is what happened here, but with a lot more money and people involved.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Promise High Returns From 2014 through June 2025, Edwin Brant Frost IV and First Liberty Building & Loan, LLC offered investors promissory notes and loan participation agreements. They promised annual returns ranging from 8% to 18%.
- Misrepresent Fund Usage Defendants told investors their funds would be used to make short-term bridge loans to businesses at high interest rates. They claimed these loans would be repaid by borrowers via Small Business Administration or other commercial loans.
- Initial Loan Performance While some investor funds were indeed used to make bridge loans, these loans did not perform as represented. Most ultimately defaulted and stopped making interest payments.
- Start Ponzi Scheme Since at least 2021, First Liberty began operating as a Ponzi scheme. New investor funds were used to make principal and interest payments to existing investors, masking the underlying loan defaults.
- Misrepresent Loan Success Frost allegedly told potential investors that First Liberty had only experienced one loan default, or that very few loans had defaulted. In reality, a significant portion of the bridge loans were in default when these statements were made.
- Expand Solicitations Initially targeting 'friends and family,' by 2024, Defendants began a more widespread public solicitation. They advertised investment opportunities through radio, internet podcasts, and the First Liberty website.
- Misappropriate Funds Frost allegedly misappropriated investor funds for personal use. This included over $2.4 million in credit card payments, more than $335,000 to a rare coin dealer, and $230,000 for family vacations.
- Fund Affiliates Investor funds were also used to pay for the operations of affiliated companies controlled by Frost, including First Liberty Capital Partners LLC, First National Investments LLC, MyHealthAI Capital LLC, The Legacy Advisory Group Inc., and The Liberty Group LLC.
The Enforcement Action
On July 10, 2025, the SEC filed charges against Edwin Brant Frost IV and First Liberty Building & Loan, LLC, seeking an asset freeze and other emergency relief. The complaint alleged a Ponzi scheme defrauding approximately 300 investors of at least $140 million. The defendants and relief defendants consented to a proposed judgment ordering the SEC's requested emergency and permanent relief, including an asset freeze and receiver, with monetary remedies to be determined later. On July 11, 2025, the District Court granted all relief sought by the SEC. The SEC's investigation remains ongoing.
Named in this action: Edwin Brant Frost IV, First Liberty Building & Loan, LLC.