Some Alabama politicians are seeking avenues to return campaign funds after it was discovered that the prolific, Georgia-based GOP donor, Brant Frost IV, had been operating a Ponzi scheme, in which the SEC said he had defrauded his clients of $140 million.
"Since at least 2021, First Liberty operated as a Ponzi scheme by using new investor funds to make principal and interest payments to existing investors, according to the complaint," the SEC said in a statement. "The complaint further alleges that Frost misappropriated investor funds for personal use, including by using investor funds to make over $2.4 million in credit card payments, paying more than $335,000 to a rare coin dealer, and spending $230,000 on family vacations.
In answering the charge brought against him, Frost acknowledged that he had misled individuals. U.S. District Judge Michael Brown ordered a receiver to try to recoup as much of the funds as possible. He also barred Frost from trading in securities for life and required him to pay restitution to investors.
"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 in a statement issued by his lawyers. "I will be cooperating with the receiver and federal authorities and ask that everyone allow the receiver time to sort things out and do his best to repair the damage I created," he added.
According to federal prosecutors, Frost, through his role as president of First Liberty, operated a Ponzi scheme by using new investor funds to make principal and interest payments to existing investors, as stated in the complaint. The complaint further alleges that Frost misappropriated investor funds for personal use, including by using investor funds to make over $2.4 million in credit card payments, paying more than $335,000 to a rare coin dealer and spending $230,000 on family vacations.
Frost has been a prolific GOP operator since 1988, when he coordinated televangelist Pat Robertson's GOP presidential campaign in Georgia. According to records, Frost donated well over $500,000 from his alleged scheme to multiple GOP lawmakers, some of whom are in Alabama.
According to public records on the Alabama Secretary of State's website, Frost poured tens of thousands into the campaigns of well-known conservatives in the state, State Auditor Andrew Sorrell, State Rep. Ben Harrison (R-Elkmont), and the Alabama State Board of Education.
In Frost's home state of Georgia, at least one member of the House of Representatives stated that he would be returning the money, according to the Columbus, Ga. Ledger-Enquirer.
The scheme doubly hit Sorrell, since he both received campaign contributions through Frost and had money invested in Frost's fund.
"I am among the hundreds of people who lost money when the federal government recently discovered that First Liberty Building & Loan in Newnan, Georgia was defrauding its investors through a Madoff-like Ponzi scheme," Sorrell said in a statement to 1819 News. "The political action committee that I operate had invested money as well, which is commonplace with committees of this kind."
"The company had marketed itself through conservative channels as a 'patriotic and 'Christian' investment opportunity," he continued. "It's an unfortunate situation that happens frequently across the U.S., and all of us who trusted the marketing and lost our investments have learned a tough lesson."
Sorrell added, "One of the individuals responsible for the scheme donated personally and through his company to dozens of conservative Republican campaigns and political action committees across the southeast, including mine, and I will return the contributions to a court-appointed receiver as soon as the process is available."
Sorrell pledged to return the money without it going directly back into he hands of the fraudsters.
"It's important that all recovered money goes back to the investors so everyone can be made whole rather than to the individual who defrauded us," Sorrell concluded.
Harrison was equally taken aback by the revelation, echoing Sorrell's desire to return the funds without it falling into the hands of the guilty parties.
"This is the first I've heard about this issue," Harrison told 1819 News. "I am looking into the legal avenues to return the funds. I am committed to making sure I do everything in my power to support the victims of this financial tragedy.
The SEC charges against Frost are civil, not criminal. However, in cases of alleged mass fraud, such as this, prosecutors often bring criminal charges in addition to the civil suit by the SEC.
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