Investors impatient to recover $140M from alleged Georgia Ponzi scheme

Seven months after an alleged $140 million Ponzi scheme collapsed, investors are growing increasingly frustrated with the slow pace of asset recovery. The scheme, which targeted Republican political circles in Georgia and Alabama, has left hundreds of victims uncertain if they’ll ever see their money again.

“We feel like we’re never going to see it, as old as we are,” said Thomas Todd, a 77-year-old retired business owner, during a Monday meeting with Georgia Secretary of State Brad Raffensperger. Todd reportedly lost $750,000 in the scheme and was on the verge of investing more before the operation collapsed.

The fraud centered around First Liberty Building & Loan, led by Brant Frost IV, a longtime fixture in conservative politics. The company marketed itself as a lender making high-interest short-term business loans, promising investors annual returns of up to 16% with the tagline “Wall Street returns for Main Street investors.”

Federal investigators say the company defrauded at least 300 investors of $140 million. According to a U.S. Securities and Exchange Commission lawsuit, Frost diverted $17 million to himself, relatives, and affiliated companies, while issuing millions more in loans that borrowers never repaid.

The scheme’s fallout has reverberated through Republican political networks. Among the victims were a company run by former Georgia GOP Chairman David Shafer, Alabama State Auditor Andrew Sorrell, and a political action committee controlled by Sorrell. Many grassroots Republicans were reportedly lured by advertisements on conservative media personalities’ shows, including those hosted by Erick Erickson, Hugh Hewitt, and Charlie Kirk.

A federal court has appointed Gregory Hays as receiver to recover funds for investors. In a January 30 report, Hays indicated he’s still analyzing 48,000 financial transactions and facing legal battles with borrowers fighting to keep assets pledged as loan collateral.

Recovery efforts have yielded modest results so far. As of December 31, the receiver reported $3.59 million in recovered assets. Additional recoveries include nearly $139,000 from selling five luxury vehicles surrendered by the Frost family, and plans to sell First Liberty’s office in Newnan, an Atlanta suburb, for $581,000 after settling a $160,000 lien. Hays also sold Frost’s Patek Philippe watch for $10,000.

The receiver has recovered over $300,000 from more than 1,000 political donations made by the Frost family using investor funds. These donations often supported far-right Republican candidates. However, asset recovery expenses have already reached $412,000, with Hays warning that recouping assets “will be an expensive and protracted process.”

The scandal has sparked a political dispute over regulatory oversight. Secretary of State Raffensperger, who is running for governor and faces a Republican primary in May, recently appointed lawyer Jason Doss as an investigative agent and is proposing new legislation that would allow his office to directly order fraudsters to repay investors. Currently, his office is limited to civil actions and referring information to receivers and prosecutors.

Meanwhile, Republican state lawmakers, responding to pressure from defrauded party members, are pushing House Bill 934, which would transfer securities regulation from Raffensperger’s office to the Georgia Department of Banking and Finance. The bill’s supporters criticize the secretary of state’s securities division for failing to detect the fraud before First Liberty collapsed.

During a House Banks and Banking Committee hearing on Thursday, Assistant Commissioner of Securities Noula Zaharis cautioned that shifting regulatory responsibilities on July 1 could disrupt ongoing operations. She also noted the inherent challenges in detecting Ponzi schemes, stating, “Schemes like this are set up to create an illusion and they are schemes that pay.”

Republican lawmakers remained unconvinced. “I just don’t really see a system or plan in place to preemptively identify these things and eliminate these bad actors before they get too far gone,” said Republican state Rep. Carter Barrett of Cumming.

It remains unclear whether federal prosecutors will pursue criminal charges. A spokesperson for Atlanta U.S. Attorney Theodore Hertzberg declined to comment on Monday regarding potential prosecution.