A federal judge in Atlanta heard Edwin Brant Frost IV’s not-guilty plea on Thursday, after federal prosecutors charged the prominent Georgia Republican with a single count of wire fraud tied to alleged Ponzi scheme activity involving First Liberty Building and Loan. The charge, according to prosecutors, came out of a federal investigation that began after the company collapsed last June. Frost entered the plea after waiving indictment, a step commonly taken shortly before later guilty pleas in federal cases, and he is free on bail.
U.S. Attorney Theodore Hertzberg said Frost would not contest the charges and that prosecutors believe a guilty plea is likely in early May. Hertzberg also said the federal government is considering whether additional charges could be filed against others, depending on the evidence. He characterized the case as part of a broader effort prosecutors say they have been building in the background while the enforcement actions expanded through other agencies.
Federal prosecutors said the wire fraud count carries a maximum potential prison term of 20 years, but any sentence recommendation would hinge on how much money a court determines was stolen. Hertzberg told the AP that the loss figure is “very significant,” and he said prosecutors intend to recommend a sentence close to the top of the 20-year range for Frost, who is 68. He noted that while $156 million is the amount of money taken in by First Liberty, a receiver estimated that investors were repaid enough that the amount lost is lower, at least $65 million.
Prosecutors described the alleged mechanics of a Ponzi scheme as the use of new investor funds to pay earlier investors, rather than profits generated through legitimate lending activity. While First Liberty made loans to businesses, prosecutors said Frost used incoming money from new investors to pay previous investors. Prosecutors also said Frost skimmed more than $5 million of investor funds for personal use, including spending more than $140,000 on jewelry and more than $230,000 to rent a vacation home in Kennebunkport, Maine—where the family of late President George H. W. Bush has spent summers—along with more than $2 million in credit card bills.
The case also has a parallel enforcement history through civil actions and state-level scrutiny, federal prosecutors said. The U.S. Securities and Exchange Commission filed a lawsuit last year against the company and Frost, and prosecutors said some investors had complained that criminal charges had moved slowly. Hertzberg responded that prosecutors have been building the case and said the willingness of Frost to plead guilty means “punishment will come quickly now,” framing the federal case as moving from investigation to consequences.
Hertzberg praised what he said were investigative efforts by the SEC and by the Georgia Secretary of State’s office, led by Brad Raffensperger. He said the government had been “operating in the background” before coming forward to ensure Frost faces “full consequences.” Georgia Secretary of State Raffensperger’s office has levied $500,000 in civil fines against three people his office says helped solicit money for First Liberty and asked state prosecutors to consider criminal charges.
The filing of the wire fraud charge also comes as a federal judge appointed a receiver to pursue recovery of investor funds. The receiver’s cash holdings were $5.16 million as of March 23, and the receiver was seeking to recoup money from nearly 30 unpaid loans. Among the potential investors described in the AP report are a company run by former Georgia GOP Chairman David Shafer, Alabama state Auditor Andrew Sorrell, and a political action committee controlled by Sorrell, as well as claims from party activists that grassroots Republicans also lost money.
Prosecutors described marketing exposure as reaching conservative media and personalities, saying some investors were drawn by ads on shows hosted by Erick Erickson, Hugh Hewitt and Charlie Kirk. Frost, prosecutors said, publicly apologized for his role earlier, and the case is now set against the backdrop of federal and state actions, with sentencing expected to follow if Frost pleads guilty and a court determines the amount of money stolen.