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The U.S. Securities and Exchange Commission filed a complaint against Edwin Brant Frost IV of Georgia and his First Liberty Building & Loan, LLC, alleging the business was operated as a Ponzi scheme.
The document asserts that Frost and his company “raised at least $140 million from approximately 300 investors through the sale of loan participation agreements and promissory notes that offered annual returns of 8% to 18%.
“As of 2021, approximately 80% of interest and principal payments to investors were sourced from new investor funds, and not from Bridge Loan interest payments or principal repayments,” the SEC complaint claims.
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The SEC alleged Frost spent investor funds in various ways, some of which included making more than $570,000 in political donations, buying a $20,800 watch and making “over $2.4 million in payments to credit cards issued to him and his business entities.”
The Associated Press indicated that Frost is a Republican.
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“The promise of a high rate of return on an investment is a red flag that should make all potential investors think twice or maybe even three times before investing their money,” said Justin C. Jeffries, associate director of enforcement for the SEC’s Atlanta regional office, according to a press release.
“Unfortunately, we’ve seen this movie before — bad actors luring investors with promises of seemingly over-generous returns — and it does not end well.”
Lawyer Joshua Mayes of Robbins Alloy Belinfante Littlefield LLC is representing Frost in the matter, and he provided Fox News Digital with a statement from Frost, who admitted he had misled people.
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“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. 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,” Frost noted in the statement.
“I would like to apologize personally to those I have harmed, but I am under restrictions which prevent me from doing so. While I do not deserve it, I am grateful for the support of friends and family as I confront this situation I created.”
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