ATLANTA (AP) — Georgia Secretary of State Brad Raffensperger celebrated a significant victory Wednesday when he revealed his office had secured $6.7 million in refunds for investors who were allegedly defrauded in a massive $156 million Ponzi scheme that targeted prominent Republican figures across Georgia and Alabama.
Though overseeing securities regulation has traditionally been part of Georgia’s secretary of state duties, Raffensperger has been highlighting his investigation into First Liberty Building & Loan losses while campaigning for the Republican gubernatorial nomination.
The secretary of state revealed that Bankers Life, which operates under Indiana’s CNO Financial Group, agreed to reimburse investments made by 46 individuals who put money into First Liberty through Timothy Nathaniel Darnell, a former financial adviser with the company.
“Bankers Life, as a company, chose to do the right thing and help the Georgians who lost everything in this alleged Ponzi scheme,” Raffensperger stated during a press conference.
The financial firm potentially faced legal consequences for inadequate supervision of Darnell and allowing him to market unapproved investment products.
So far, Raffensperger’s department has imposed $500,000 in civil penalties on three individuals and achieved an unusual legislative success by expanding his authority to assist securities fraud victims.
These actions occur while Raffensperger competes in a contentious primary field scheduled for May 19, which features Lt. Gov. Burt Jones, healthcare businessman Rick Jackson, and state Attorney General Chris Carr. All candidates seek to succeed Republican Gov. Brian Kemp, who cannot pursue a third consecutive term. Many Trump-supporting Republicans harbor resentment toward Raffensperger, primarily known for rejecting Donald Trump’s request to “find” votes to reverse Democrat Joe Biden’s 2020 presidential victory in Georgia. This securities case provides an opportunity for him to present a different image to GOP voters who might still consider supporting him.
Democratic candidates, meanwhile, aim to capture the governor’s mansion in battleground Georgia for the first time in nearly a quarter-century. Leading Democratic contenders include former Atlanta Mayor Keisha Lance Bottoms, party-switcher Geoff Duncan, former state Sen. Jason Esteves, and former state Labor Commissioner Michael Thurmond.
First Liberty marketed itself as a lending institution offering high-interest short-term business loans while promising investors annual returns reaching 16%. However, a U.S. Securities and Exchange Commission lawsuit filed last year alleges that company leader and Republican activist Brant Frost IV misappropriated $17 million for personal use, family members, and connected businesses, while making additional loans that borrowers failed to repay.
Victims included a business operated by former Georgia GOP Chairman David Shafer, Alabama state Auditor Andrew Sorrell, and a political action committee under Sorrell’s Republican control. Party insiders report that numerous grassroots Republicans also suffered losses, with others attracted through advertisements on programs featuring conservative hosts like Erick Erickson, Hugh Hewitt, and Charlie Kirk.
Beyond civil penalties, Raffensperger’s office has recently recommended criminal prosecution for three individuals investigators claim helped recruit investors for First Liberty. These include Brant Frost V, son of the company leader; Fayette County school board member Randy Hough; and Darnell, who also serves as president of the Georgia Republican Assembly, an organization seeking to influence state Republican politics.
Both Frost V and Darnell have rejected allegations of misconduct. Hough has not responded to media inquiries. No criminal charges have been filed against anyone.
A court-appointed receiver is also working to recover investor funds. A March 23 receiver’s report revealed First Liberty collected approximately $156 million from investors and distributed $89 million in principal and interest payments, resulting in at least $65 million in losses. As of March 23, the receiver held $5.16 million in cash while pursuing recovery from nearly 30 defaulted First Liberty loans.
While Ponzi schemes occur frequently—including a suburban Atlanta man’s conviction in January for a $380 million operation—the involvement of prominent Republicans in First Liberty has generated increased political attention.
Republican state legislators attempted to transfer securities regulation from Raffensperger’s office to state banking authorities this year, citing his office’s failure to identify schemes before their collapse. However, the secretary of state, often targeted by Republican lawmakers, successfully defended against these efforts. He then achieved a legislative win by convincing the General Assembly to approve legislation enabling his office to collect victim restitution rather than only imposing fines on violators. Governor Kemp has yet to sign or veto this measure.
