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

ATLANTA– Seven months after the collapse of an alleged $140 million Ponzi scheme that allegedly touched the highest ranks of Republican politics in Georgia and Alabama, some investors are eager to get their money back.

“We feel like we’ll never see it, as old as we are,” Thomas Todd, a 77-year-old retired business owner, told Georgia Secretary of State Brad Raffensperger during a meeting Monday.

Raffensperger says his office is stepping up its efforts even as Republican state lawmakers want to shift securities regulation to the Georgia Department of Banking and Finance, blaming the secretary of state’s securities division for failing to detect wrongdoing at the First Liberty Building. & Loan before he goes bankrupt.

Federal investigators said the company defrauded at least 300 investors of at least $140 million.

Raffensperger is running for governor, and his office’s anti-fraud efforts could become an issue in the May Republican primary.

Brant Frost IV, who led First Liberty, was involved for decades in conservative politics. His company said it was a lender that made high-interest, short-term loans to businesses, paying investors up to 16 percent annual interest. Touting “Wall Street returns for Main Street investors,” a lawsuit filed by the U.S. Securities and Exchange Commission claims Frost stole $17 million for himself, his relatives and affiliates, and loaned millions more that the borrowers never repaid.

Among those who lost money were a company run by former Georgia Republican Party Chairman David Shafer, Alabama State Auditor Andrew Sorrell, and a political action committee controlled by Republican Sorrell. Party activists said many rank-and-file Republicans lost money, while others were drawn to ads on shows hosted by conservatives, including Erick Erickson, Hugh Hewitt and Charlie Kirk.

A federal court has appointed a receiver to recover investors’ money. Receiver Gregory Hays wrote Jan. 30 that he was still piecing together 48,000 financial transactions and that some borrowers are fighting to keep real estate and other collateral that the receiver said was promised to secure loans.

Hays reported $3.59 million in available assets as of Dec. 31. Since then, an auctioneer has sold five luxury vehicles that the Frost family turned over, netting nearly $139,000. The receiver is also selling the First Liberty office in the Atlanta suburb of Newnan for $581,000, but must first clear a $160,000 lien on the property. He also sold Frost’s Patek Phillipe watch for $10,000.

Hays said he also received more than $300,000 from more than 1,000 political donations made by the Frost family using more than $1 million in investor funds. These funds have often supported far-right Republican insurgents.

But Hays says he has spent $412,000 so far that will come from investors’ money. Hays wrote that asset recovery “will be a costly and lengthy process.”

Todd and other investors lamented their choices to Raffensperger on Monday. Todd said he lost $750,000 and First Liberty collapsed just before he invested more. Todd said he used the income to fund Christian missions. calling it “God’s money.”

“They were stealing it,” Todd said. “They knew they were stealing it. And they were working on stealing it, because they knew they were in trouble.”

Raffensperger’s office recently announced attorney Jason Doss as an investigative agent. Raffensperger is proposing a new state law allowing his office to order fraudsters to repay investors directly. For now, its mandate is limited to civil actions against wrongdoers and the transmission of information to the receiver and state and federal prosecutors.

It’s unclear whether federal prosecutors will file charges. A spokesman for Atlanta U.S. Attorney Theodore Hertzberg declined to comment Monday.

Georgia House lawmakers, who have been listened to by defrauded Republicans, are pushing to turn securities regulation over to banking regulators.

Deputy Securities Commissioner Noula Zaharis told the Banking and Banking Committee on Thursday that transferring employees and responsibilities from Raffensperger’s office on July 1, as proposed in House Bill 934, could disrupt regulations. She also said Ponzi schemes are difficult to detect.

“Schemes like this are set up to create an illusion and these are schemes that pay off,” Zaharis said.

But Republicans criticized his team for failing to catch First Liberty.

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