During an interview on Wednesday, the director of the Alabama Securities Commission, Amanda Senn, told APR the ASC is actively communicating with the Alabama Secretary of State’s office and Georgia officials about the alleged First Liberty Building & Loan Ponzi scheme.
In July, the federal Securities and Exchange Commission filed charges against First Liberty Building & Loan, LLC, and its founder, Edwin Brant Frost IV, accusing Frost of defrauding “approximately 300 investors of at least $140 million.”
Members of the Frost family were deeply involved in Republican politics in Georgia as regular donors who sat on and chaired GOP committees at both the state and county levels. They had also been involved in conservative politics outside of the state. Several Alabama politicians were affected by the rapid collapse of the company, which frequently relied on appeals to conservative politics to attract investors.
A court-appointed receiver wrote in one filing earlier this year that “First Liberty appears to have directly, indirectly or through the Frost family made almost 1,000 political ‘donations’ totaling over $1 million using investor funds.” In July, Alabama Secretary of State Wes Allen encouraged any recipients of political contributions connected to the alleged scheme to return them to the receiver so they could be returned to the affected investors.
Alabama State Representative Benjamin Harrison, R-Elkmont, state Board of Education member Allen Long, R-Florence, and state Auditor Andrew Sorrell each received donations from the Frost family or related firms. All three appear to have returned the funds since the SEC’s investigation was launched.
Sorrell has also said he personally lost money as a victim of the scheme, telling the Associated Press that it was a “tough lesson.”
After the SEC’s investigation was announced, the ASC was “inundated with phone calls,” Senn said during a recent meeting. She explained to APR that after a “big case breaks,” people are naturally “concerned, you know, that they may have been an investor.”
“Sometimes they don’t always know if they’re invested in certain enterprises,” she noted. “Some of them have financial advisors. Some of them know people who might have known someone [affected].”
Senn also told APR that the ASC has not launched its own investigation into the alleged Ponzi scheme yet, but that the agency would do so “if we aren’t confident that Alabama’s interests are addressed.”
“It wouldn’t be a wise use of Alabama taxpayer dollars for us to spend money on investigative steps right now because there’s a very professional and deep, thorough investigation being done in Georgia,” she said. “I know Secretary Raffensperger has taken this matter very seriously and he’s dedicated resources to looking into it, and other authorities as well.”
Georgia Secretary of State Raffensperger’s office has been actively pursuing the case in recent months; in August, he used the investigation to argue for more freedom in the pursuit of fraud cases.
The state agency responsible for enforcing campaign finance laws in Georgia has also been investigating potential breaches of campaign finance law connected to the alleged scheme.
Greg Bluestein and David Wickert of the Atlanta Journal-Constitution reported on Thursday that the Georgia State Ethics Commission recently expanded the scope of its case regarding possible violations of campaign finance law related to the alleged fraud.
Near the end of July, the Georgia State Ethics Committee filed charges against the Georgia Republican Assembly PAC, which was operated by Brant Frost V, for “failing to register as an independent committee.” The Georgia Republican Assembly that the PAC was named after quickly attempted to distance itself, but the commission added it to the list of defendants earlier this week.
The commission’s director told the Journal-Constitution the decision was the “results of an ongoing investigation into illegal activity to influence Georgia elections by these organizations.”
Due to the ongoing federal government shutdown that began on Wednesday, all civil litigation “in which the United States is a party” has been stayed, a category that includes the SEC’s case against First Liberty Building & Loan. The stay will “last until appropriations are restored.”
Before the stay, the court appeared to be considering allowing the court-appointed receiver to employ an auctioneer who could sell several vehicles and a piece of property as part of the receivership.
When Senn was asked what she would tell Alabamians who had grown more worried about fraud as a result of the First Liberty case, she said “ always trust but verify and just be careful with investments, be sure that you’re asking the right questions.”
The First Liberty case “just serves as a strong reminder for people to continue to trust but verify,” Senn stated. “Always conduct your due diligence and our office is a resource for the public, if they have any questions about any type of investment opportunity.”
