The U.S. Securities and Trade Fee (SEC) has filed emergency enforcement actions in opposition to First Liberty Constructing & Mortgage, LLC and its founder, Edwin Brant Frost IV, alleging they operated a $140 million Ponzi scheme that spanned greater than a decade and defrauded round 300 traders.
Filed on July 10, 2025, within the U.S. District Court docket for the Northern District of Georgia, the SEC’s criticism claims that from 2014 to June 2025, Frost and First Liberty lured retail traders with guarantees of returns as much as 18%. They marketed promissory notes and mortgage participation agreements below the guise that the funds could be used to finance short-term bridge loans to companies at excessive rates of interest. Buyers had been led to imagine that the loans had a wonderful reimbursement observe file, usually backed by Small Enterprise Administration or different industrial financing.
Nonetheless, the SEC alleges that the fact was starkly totally different. A lot of the loans underperformed, defaulted, and finally ceased making funds. Since at the least 2021, First Liberty allegedly started functioning as a Ponzi scheme—utilizing new investor capital to pay returns to earlier traders.
The criticism additional accuses Frost of misappropriating investor funds for private enrichment. This included greater than $2.4 million in bank card funds, over $335,000 spent on uncommon cash, and $230,000 used for household holidays.
“The promise of a excessive charge of return on an funding is a purple flag that ought to make all potential traders assume twice or perhaps even thrice earlier than investing their cash,” stated Justin C. Jeffries, Affiliate Director of Enforcement for the SEC’s Atlanta Regional Workplace. “Sadly, we’ve seen this film earlier than—dangerous actors luring traders with guarantees of seemingly over-generous returns—and it doesn’t finish properly.”
The SEC is looking for emergency reduction together with an asset freeze, the appointment of a receiver, a full accounting, and expedited discovery. Everlasting injunctions, civil penalties, and disgorgement of ill-gotten positive factors are additionally being pursued.
With out admitting or denying the costs, Frost, First Liberty, and the 5 named reduction defendants have agreed to the SEC’s emergency and everlasting reduction requests. Financial penalties and different monetary cures will likely be decided at a later date.
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Kosta has been working within the crypto trade for over 4 years. He strives to current totally different views on a given subject and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced protection of occasions and developments within the crypto house, offering data to his readers from a impartial perspective.
