ATLANTA — Federal prosecutors have filed wire fraud charges against a well-known Georgia Republican accused of orchestrating a massive investment fraud scheme worth $156 million, with the defendant entering a not guilty plea Thursday.
Edwin Brant Frost IV faces his first criminal charge stemming from an investigation that launched following the June collapse of First Liberty Building and Loan.
Before entering his not guilty plea, Frost chose to waive his right to an indictment, a procedural move that often signals an eventual guilty plea in federal proceedings. The 68-year-old Newnan resident has already issued a public apology for his involvement and remains out of custody on bail.
Federal prosecutor Theodore Hertzberg revealed to The Associated Press that Frost plans to “not contest the charges” and will likely change his plea to guilty in early May. Hertzberg indicated that additional defendants could face charges based on ongoing evidence review.
While the wire fraud charge could result in up to 20 years behind bars, sentencing guidelines will largely depend on the final dollar amount a judge determines was stolen. Court-appointed receivers report that although First Liberty collected $156 million from investors, actual losses total at least $65 million since some participants received payouts.
Hertzberg indicated prosecutors will seek a sentence near the maximum 20-year term for Frost.
“The loss here is very significant,” he said.
First Liberty marketed itself as a company that collected investor funds to provide short-term, high-yield business loans, promising annual returns as high as 18%. Federal authorities allege that while the company did issue some business loans, Frost operated a classic Ponzi scheme by using new investor money to pay earlier participants. Prosecutors further claim Frost diverted over $5 million in investor funds for personal expenses, including jewelry purchases exceeding $140,000, vacation home rental costs of more than $230,000 over several years in Kennebunkport, Maine — the coastal community known as a summer retreat for the Bush family — and credit card payments totaling over $2 million.
The Securities and Exchange Commission initiated civil proceedings against both Frost and his company last year. Some investors had expressed frustration over the delay in criminal prosecution, but Hertzberg explained his office was methodically developing the case and that Frost’s expected guilty plea will expedite the punishment process.
“We were operating in the background, and we’ve now come out of the shadows to ensure that Mr. Frost faces full consequences for his actions,” Hertzberg said, commending investigative work by the SEC and Georgia Secretary of State Brad Raffensperger’s office.
Victims of the scheme include a business owned by former Georgia GOP Chairman David Shafer, Alabama state Auditor Andrew Sorrell, and a political action committee under Sorrell’s control. Republican party organizers report that numerous grassroots party members also suffered losses, with many initially attracted through advertisements on programs featuring conservative hosts such as Erick Erickson, Hugh Hewitt and Charlie Kirk.
Raffensperger’s office has imposed $500,000 in civil penalties against three individuals allegedly involved in soliciting investments for First Liberty and has requested state prosecutors to pursue criminal charges against them.
A court-appointed receiver is working to recover funds for investors and held $5.16 million in cash as of March 23, while pursuing collection efforts on nearly 30 outstanding First Liberty loans.
