How an alleged Ponzi scheme targeting Republicans left investors and politicians reeling

CEDARTOWN, Ga. (AP) — A federal receiver is on the hunt to recover $140 million lost in an alleged Ponzi scheme that benefited some Republicans in the top ranks of their party in Georgia and Alabama. He’s looking to claw back funds, including almost 1,000 political donations totaling more than $1 million, that often backed far-right Republican insurgents.

Some of these same politicians say they too lost money, but others left holding the bag for First Liberty Building & Loan are rank-and-file conservatives, swayed by talk show pundits who promoted it as an opportunity for Christians and “America First MAGA patriots.”

“I worked my whole life to build up savings and have a little bit of retirement so I could just live comfortably,” said Michael Tinney, a 59-year-old real estate broker from Cedartown, Georgia. Tinney said he deposited $600,000 after hearing First Liberty pitched on shows hosted by conservatives including Erick Erickson, Hugh Hewitt and Charlie Kirk.

First Liberty had promised returns up to 16% by making high-interest loans to businesses. Brant Frost IV, an evangelical powerbroker, touted “Wall Street returns for Main Street investors.” But he skimmed $17 million for himself, his relatives and their affiliated companies, and loaned millions more that borrowers never repaid, a U.S. Securities and Exchange Commission lawsuit claims.

“We’ve got retired teachers, we’ve got retired businessmen, we’ve got retired ministers who have been part of this program as well as doctors, lawyers, everyone else you can imagine,” his son, Brant Frost V, said in 2024. Tinney said the younger Frost drove to his office to secure his investment.

‘Substantial losses’ to the investors

According to a July 21 report from court-appointed receiver S. Gregory Hays, assets now include just $1.2 million in cash along with some Frost family real estate.

Hays told The Associated Press it’s too early to estimate how much money is recoverable, but he’s moving to foreclose on collateral pledged by borrowers who defaulted, including a failed South Carolina factory. Hays also seized and plans to auction Brant Frost IV’s Aston Martin sports car. A social media post celebrating that 2022 purchase is particularly scorned by angry investors.

But Hays doubts he can get everything back.

“The investors are going to have substantial losses here,” he said.

Georgia and Alabama also are investigating. Georgia Secretary of State Brad Raffensperger urged politicians to return campaign cash. Hays said he’s already received $110,000, plus a returned $20,000 charitable donation.

Frost said on July 11 that he takes “full responsibility” and would “spend the rest of my life trying to repay as much as I can to the many people I misled and let down.”

But no criminal charges have been announced, and some Frost relatives retain influential positions in the Georgia Republican Party, whose chairman, Josh McKoon, has had the Frosts’ political and financial support. McKoon said the party returned nearly $37,000 in Frost donations and he’s “profoundly saddened that members of our conservative movement” lost money.

Some of the money flowed both ways

Campaign disclosures show First Liberty, the Frosts and associated companies contributed widely to Republican causes, including more than $700,000 in Georgia, $150,000 in Alabama and nearly $140,000 in Maine, where the Frosts spent $230,000 over multiple years renting a Kennebunkport vacation home.

Georgia donations included $1,000 to former party chairman David Shafer’s unsuccessful 2018 lieutenant governor campaign, and tens of thousands to the state party. Shafer pushed efforts to overturn President Donald Trump’s 2020 defeat in Georgia — leading to an indictment — now stalled on pretrial appeal — against Shafer, Trump and others.

A company run by Shafer — Springwood Capital — says in a July 10 lawsuit that it lost $200,000 invested in First Liberty. Its attorney, Brent Herrin, said the company is “one of hundreds of defrauded investors.” Herrin declined to confirm Shafer owns the company, but financial disclosures show Shafer in 2017 owned at least part of Springwood Capital’s parent company. McKoon, who received $4,500 in Frost donations, handled Springwood Capital’s incorporation papers. McKoon said he didn’t lose any money.

Salleigh Grubbs, Georgia GOP first vice-chairman, said on a July 16 radio show that “a lot of Republican members … were heavily invested.”

In Alabama, Republican state Auditor Andrew Sorrell says he and a political action committee he controls both lost money. He hasn’t said how much he lost personally, but records show Alabama Christian Citizens PAC invested $29,000.

“The company had marketed itself through conservative channels as a ‘patriotic’ and ‘Christian’ investment opportunity,” Sorrell said, adding he learned a “tough lesson.”

But Sorrell, now running for Alabama Secretary of State, also benefited: He pocketed $55,000 for his campaigns, while Alabama Christian Citizens and Sorrell’s federal-level U.S. Christian Citizens PAC each got $12,500.

Warm words from pundits

Erickson, an Atlanta-based syndicated radio host, once steered listeners to the Frosts. “They’re active in conservative politics … good Christian family. I have known them for years. They are wonderful people,” he said in 2020.

“This is how we grow, this is how we fund our movement, and this is how we help out America First MAGA patriots,” radio host John Fredericks said during a June 2024 interview with Brant Frost V.

Tinney said the hosts made First Liberty sound “pretty credible.” Now he calls their warm endorsements a “recipe for disaster,” and is still waiting for apologies.

Fredericks did call the SEC complaint “disturbing” and “damning” during a July 16 show.

“I have talked to them many times, never had an inkling that any of that was going on,” Fredericks said, adding: “They have to have their day to fight the charges.”

Holding onto power despite the critics

Brant Frost V, accused Wednesday in a Georgia Ethics Commission complaint of illegally influencing elections, resigned from the state Republican committee Thursday and is resigning as Coweta County GOP chairman, McKoon said. Krista Frost, Brant Frost IV’s wife, remains on the state committee and Brant Frost V’s sister, Katie Frost, remains 3rd Congressional District GOP chair.

McKoon and some allies won party elections in June after a nominating committee led by Katie Frost endorsed them. McKoon’s vanquished rival, David Cross, is contesting those results to the Republican National Committee, saying McKoon and the Frosts engaged in skullduggery. Cross, a financial adviser, says he first reported First Liberty’s possible misdeeds to state authorities in 2024.

Georgia Republican National Committeewoman Amy Kremer, whose daughter was among those defeated, demanded the Frosts’ ouster.

“We cannot claim to be the party of law and order while turning a blind eye to financial crimes committed under the banner of Republican leadership,” Kremer said.

For his part, Tinney has something else in mind: “My goal is justice at this point.”