Alabama Secretary of State Wes Allen has called for the return of funds received by Alabama Republicans through an alleged $140 million Ponzi scheme.
In a Monday press release, Allen called for recipients to return funds from a Ponzi scheme the U.S. Securities and Exchange Commission has accused Georgia investor Edwin Brant Frost IV of running.
“I take allegations of financial fraud seriously, especially when that fraud bleeds into campaign finance,” Allen said.
“I encourage any Alabamians who have been involved to cooperate fully with law enforcement, including the SEC and our Alabama Securities Commission to ensure that the victims who have been misled may be made whole,” he continued.
The SEC filed its suit against Frost on July 10, accusing the investor of gathering at least $140 million from roughly 300 investors from 2014 to 2025 through fraudulent means; $570,000 of which they say went to political contributions. Frost has long been a prominent backer of the state’s Republican Party.
According to campaign finance records, Frost—alongside members of his family and associated businesses—has made at least $132,000 in contributions to Alabama politicians and political action committees.
Alabama politicians who received funds from Frost and associated investment firms include state Rep. Benjamin Harrison, R-Elkmont; Alabama State Board of Education member Allen Long, R-Florence; and Alabama State Auditor Andrew Sorrell, alongside his PAC, Alabama Christian Citizens.
Sorrell, who is currently running for Alabama secretary of state, received at least $71,000 in contributions from the Frost family and Frost firms.
According to campaign finance records, Alabama Christian Citizens also made a loan of $29,000 to First Liberty Building and Loan, one of Frost’s companies, in April 2024.
Frost companies have been Sorrell’s largest donors in his campaign for secretary of state. Such loans made by a PAC for “the purpose of influencing the results of an election” are legal under Alabama election laws.
“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 the Alabama Reflector.
“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,” he continued.
Harrison has received $22,800 from Frost, while Long received $40,000 during his campaign for ALBOE from Frost’s company, First National Investments, in December 2023. Harrison has stated he will return funds received in connection with the alleged scheme.
Federal campaign finance records indicate former U.S. Representative Mo Brooks, R-Alabama, received $4,575 from Frost companies for his failed campaign for U.S. Senate in 2022, and U.S. Representative Barry Moore, R-Alabama, received $3,300 from the investor’s firms.
Frost allegedly offered investors loan participation agreements and promissory notes, which he claimed offered annual returns of eight to 18 percent and would go toward making short-term business loans at relatively high interest rates, or what the SEC referred to as “bridge loans.”
Investors were allegedly told these bridge loans, alongside interest, would be paid back by the case’s defendants using Small Business Administration loans alongside other commercial loan types.
The commission argues, however, that while some investor funds were used for bridge loans, the loans did not perform as represented to investors, with only a few loans having been paid in full while Frost “knowingly misrepresented the success of the Bridge Loan program to investors.”
The commission said most bridge loans filed as a part of the scheme have defaulted and have ceased making interest payments. The defendants, however, allegedly continued to make interest payments to investors on the defaulted loans, and beginning in 2021, started to use funds raised from new investors in order to make payments to existing investors.
The case’s plaintiffs wrote that Frost’s companies “received proceeds from this scheme without providing any value in return and were thus unjustly enriched thereby.”
Plaintiffs also accused Frost of using investor funds to make personal payments to himself and family members “in excess of $5 million.”
Of the $5 million, the SEC alleged Frost spent $335,000 in investor funds on rare coins, $20,800 for a Patek Phillipe watch, $140,000 for jewelry and $2.4 million for credit card payments.
Frost allegedly also used investor funds to pay for the operations of companies he controlled, including First Liberty Capital Partners LLC, First National Investments LLC, MyHealthAI Capital LLC, The Legacy Advisory Group Inc. and The Liberty Group LLC.
The commission said as recently as May 24, Frost withdrew $100,000 in investor funds for personal use.
According to plaintiffs, Frost’s alleged Ponzi scheme began by offering involvement to friends and family in 2014. The defendants then began seeking “more widespread public solicitation of potential investors” in 2024 by advertising the opportunity to invest in promissory notes via conservative Christian talk radio programs “The Erick Erickson Show” and “The Hugh Hewitt Show,” as well as internet podcasts and the First Liberty website.
The Alabama Secretary of State’s Office oversees campaign finance reporting. However, it cannot investigate or prosecute alleged violations of the law or mandate the contribution’s return.
Allen provided contact information for the court-appointed receiver in the federal case, Gregory S. Hays, who he urged recipients of money generated by the alleged scheme to return their funds to.
Georgia Secretary of State Brad Raffensperger has similarly urged any political entity that accepted contributions from Frost to return funds to a federal receiver, “so that the victims of the alleged fraud may be made whole.”
Other recipients of Frost’s political contributions include Georgia Governor Brian Kemp, who, according to campaign finance records, received a donation from Frost in 2019, as well as Florida Governor Ron DeSantis and U.S. Rep. Lauren Boebert, R-Colorado.
