Georgia Secretary of State Brad Raffensperger said his office persuaded Bankers Life to refund $6.7 million to investors who lost money in an alleged Ponzi scheme tied to First Liberty Building & Loan, offering restitution for people Raffensperger said were victimized by the scheme.
Raffensperger said the refund would go to 46 people who invested in First Liberty through Timothy Nathaniel Darnell, a former financial adviser at Bankers Life’s parent, CNO Financial Group. He said the repayment involved Bankers Life, a unit of Indiana-based CNO Financial Group, which agreed to repay amounts invested by those individuals.
Raffensperger said in a statement to reporters that “Bankers Life, as a company, chose to do the right thing and help the Georgians who lost everything in this alleged Ponzi scheme.” The agreement came as his office continued pursuing securities-violation claims connected to the First Liberty collapse.
The announcement also highlighted how Raffensperger is using the securities-fraud case as a proof point in his Republican governor run. He is seeking the nomination in a May 19 primary against Lt. Gov. Burt Jones, health care entrepreneur Rick Jackson and state Attorney General Chris Carr, all seeking to replace Republican Gov. Brian Kemp, who is barred from seeking a third term.
The case gives Raffensperger an additional way to frame his public record to Republicans who have been skeptical of him, including some Trump-loyal party members who have criticized his refusal to comply with Donald Trump’s demand that Raffensperger “find” votes to overturn Democrat Joe Biden’s 2020 presidential win in Georgia. Democrats, meanwhile, are pursuing the governor’s seat in Georgia for the first time in 24 years, with figures including former Atlanta Mayor Keisha Lance Bottoms, Republican-turned-Democrat Geoff Duncan, former state Sen. Jason Esteves and former state Labor Commissioner Michael Thurmond.
Raffensperger’s securities efforts in the First Liberty matter have included civil penalties and moves aimed at possible criminal accountability. His office has issued $500,000 in civil fines against three people so far and has asked prosecutors to consider criminal charges against investigators’ alleged helpers in soliciting money for First Liberty.
The people Raffensperger’s office has asked prosecutors to consider charging include Brant Frost V, the son of Brant Frost IV, Fayette County school board member Randy Hough, and Darnell, who is also the president of the Georgia Republican Assembly, a group that says it seeks to influence state Republican politics. Frost V and Darnell have denied wrongdoing, Hough did not respond to requests for comment, and no one has been charged criminally.
At the federal level, a judge appointed a receiver who is trying to recover investor money. A March 23 receiver’s report said First Liberty raised nearly $156 million from investors and paid out $89 million in principal and interest, leaving at least $65 million in losses. The report also said the receiver had $5.16 million in cash as of March 23 and was trying to recoup money from nearly 30 unpaid loans.
According to an earlier U.S. Securities and Exchange Commission lawsuit, First Liberty and its leaders told investors the company was making high-interest short-term business loans that could pay investors up to 16% annual interest. The SEC lawsuit, filed last year, alleged that Brant Frost IV stole $17 million for himself, relatives and affiliated companies and lent millions more that borrowers never repaid.
While Ponzi schemes are not unusual, the case has taken on extra political attention because some of those who lost money were prominent Republicans in Georgia and Alabama. The AP said victims included a company run by former Georgia GOP Chairman David Shafer, Alabama state Auditor Andrew Sorrell and an Sorrell-controlled political action committee.
Separately, Georgia lawmakers this year considered reducing the reach of Raffensperger’s office over securities enforcement, with House Republicans blaming his office for not detecting schemes before they imploded. Raffensperger resisted those changes and, the AP reported, won legislative support for giving his office authority to collect restitution for victims instead of only fining wrongdoers. That measure is awaiting Kemp’s signature or veto.