First Liberty Building & Loan founder Brant Frost IV approached Lisa Brown in mid-2023 with a tempting offer: If her firm took out a $2 million construction loan from the Newnan-based lender, she could buy and expand an assisted living facility on valuable land northeast of Atlanta in Winder.
Brown agreed weeks later. Her company, which operates an Alzheimer’s care facility in northeast Georgia, struck a deal this spring to sell the expanded complex to another health care firm for $4 million.
But there was a catch. According to a lawsuit filed this week, one of Frost’s companies never transferred the deed to Brown’s firm. Now, following First Liberty’s abrupt closure last month, she’s stuck in legal and financial limbo.
The Tuesday filing is a snapshot of the legal troubles swirling around First Liberty and related firms since the company ceased all business operations in late June.
On Thursday, the U.S. Securities and Exchange Commission alleged First Liberty defrauded investors across the country and operated a $140 million Ponzi scheme.
A federal judge on Friday appointed S. Gregory Hays as a receiver to manage the affairs of First Liberty and several related companies and also ordered a freeze of First Liberty’s assets to try to recoup money for investors.
Frost IV and the companies, without admitting or denying the allegations, consented to federal regulators taking over the companies, according to the SEC.
Frost IV said in a statement to The Atlanta Journal-Constitution on Friday that he’s cooperating with authorities and asks that investors “allow the receiver time to sort things out and do his best to repair the damage I created.”
He added: “I take full responsibility for my actions and am resolved to spend the rest of my life trying to repay as much as I can to the many people I misled and let down.”
First Liberty, which is not a bank and was not insured by the Federal Deposit Insurance Corp., previously said it was “cooperating with federal authorities as part of an effort to accomplish an orderly wind-up for the business.”
State regulators are also scrutinizing the firm, opening a civil investigation and urging investors to contact regulators.
Frost IV’s attorney, Joshua Mayes, said a receiver could pause any private lawsuits and take over civil actions involving the company “for the benefit of the investors.”
Financial fallout
The firm’s website said it was founded in 1993 by Frost IV, a fixture in Georgia’s conservative grassroots scene who once served as state director for Pat Robertson’s 1988 presidential bid.
His son, Brant Frost V, is a former vice-chair of the Georgia GOP and a principal at First Liberty. His daughter, Katie Frost, chairs the party’s 3rd District committee. The company also advertised on the “Erick Erickson Show,” and Frost V made appearances on Charlie Kirk’s podcast.
Credit: Screenshot
Credit: Screenshot
The company offered what it called “creative financing solutions” for small and midsize businesses seeking alternatives to traditional banks, with loans ranging from $250,000 to $20 million.
It also advertised “First Liberty Notes” that allowed investors to put money into short-term and bridge loans to business borrowers. The program, as advertised on the First Liberty website, promised returns to investors of at least 8% with an investment of $25,000 and up to 13% on at least $250,000 invested.
Atlanta attorney Craig Kuglar said he’s already investigating First Liberty’s collapse, and he expects investor litigation to follow.
The lawsuit filed earlier this week by Brown’s company, Haven Real Estate Holdings of Winder, against a company related to the lender, called First Liberty Capital Partners LLC, is just one of the legal battles First Liberty is now embroiled in.
Haven Real Estate Holdings struck a deal to sell her assisted living facility in late May of this year and was told in early June by Frost IV that the issue of getting the deed for her property “was worked out,” according to the complaint filed in Coweta County Superior Court.
But it turned out it was not, the lawsuit says. And then, to Brown’s surprise, First Liberty Building & Loan shut down. In the complaint, Haven Real Estate Holdings alleges breach of contract by First Liberty Capital Partners and unjust enrichment.
On Thursday, First Liberty Capital Partners was hit with another lawsuit, this one filed by Springwood Capital LLC in Cobb County Superior Court.
Gwinnett County-based Springwood Capital said in its complaint that it wired hundreds of thousands of dollars to First Liberty to participate in loans to other businesses and was not repaid the amount due and the interest it was supposed to make on the loans.
Springwood Capital, in the lawsuit, said it wired a total of $200,000 to First Liberty, sending four payments of $50,000 each to invest in the loan program from January through April of 2024. However, Springwood Capital says First Liberty did not pay the interest it said it was due.
The businesses the loans were intended for included Brown’s Haven Real Estate Holdings of Winder and three other firms, according to the lawsuit.
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