SEC: First Liberty misused fresh investor money in $140 million scheme

A Georgia investment firm and its founder are accused of running a $140 million scheme built on false promises, unpaid loans, and investor money recycled as returns. 

The Securities and Exchange Commission filed a civil complaint on July 18 in federal court in Atlanta against Edwin Brant Frost IV and his firm, First Liberty Building & Loan, LLC. According to the SEC, Frost raised at least $140 million from roughly 300 investors between 2014 and June 2025 through a mix of promissory notes and loan participation agreements—securities that promised annual returns as high as 18 percent. 

The SEC claims Frost told investors their money would fund short-term “Bridge Loans” to small businesses waiting on longer-term financing from the SBA or other commercial lenders. In theory, the high-yield notes would be paid back through interest collected on those bridge loans. 

But in practice, according to the complaint, most of those loans didn’t perform—and many defaulted. The SEC says that by 2021, the firm had begun using money from new investors to pay monthly interest to earlier ones. In short, the SEC calls the structure “Ponzi-like.” 

The complaint also states that investor funds were often used for personal expenses or routed to affiliated companies controlled by Frost, including First Liberty Capital Partners, MyHealthAI Capital, and The Liberty Group. These entities, named as relief defendants in the case, are accused of being unjustly enriched, receiving millions in investor money without providing value in return. 

Frost is also accused of misrepresenting the success of the Bridge Loan program. The SEC says he told investors the firm had only seen one loan default, or “very few” defaults. In reality, according to the complaint, the default rate was far higher—potentially as much as 90 percent. 

As recently as May 2025, Frost allegedly assured a concerned investor that a $3.4 million loan would be repaid “in June” and that the borrower’s finances were strong. But the SEC says Frost had known since 2022 that the borrower had filed for bankruptcy. 

The SEC also alleges that Frost spent investor funds on luxury purchases: over $230,000 on a vacation rental in Maine, more than $140,000 on jewelry, $335,000 with a rare coin dealer, and over $2.4 million in credit card payments. The complaint points to a $100,000 withdrawal Frost made for himself just nine days after being interviewed by SEC staff. 

By June 2025, First Liberty had shut down operations. Still, the firm’s website as recently as May claimed it had funded over $100 million in bridge loans and was actively raising capital. 

The SEC is asking the court to freeze assets, appoint a receiver, and permanently bar Frost from raising funds through the sale of securities, with an exception for trading listed securities in his personal account. It is also seeking civil penalties and the return of funds. 

For financial advisors, especially those evaluating private offerings, the case underscores the importance of scrutinizing yield promises, borrower quality, and fund flows. When a high return looks easy, it rarely is.