NEWNAN, Ga. — A 93-year-old Georgia man says he invested more than $1.3 million of his retirement savings into what federal investigators now allege was a massive Ponzi scheme based in Georgia.
The U.S. Securities and Exchange Commission has accused First Liberty Building and Loan and its founder, Edwin Brant Frost IV, of defrauding at least 300 investors out of $140 million.
Hampton resident James McMaster is one of those investors. He told Channel 2 consumer investigator Justin Gray that he believed the investment was a safe way to generate monthly income in retirement.
McMaster said he met personally with Frost several times at the First Liberty offices, sharing his life story with Frost from shining shoes as a child to growing up the son of sharecroppers.
“I’m not going to let it eat me alive,” McMaster told Gray. “The first money was $250,000.”
McMaster said the company delivered monthly interest checks as promised, which encouraged him to continue investing. He believed his money was being used to provide bridge loan financing for specific construction projects.
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After the initial investment, he wired money for two more projects and even visited a memory care facility in Athens that one of those investments was supposed to help fund.
“Total, I have $1.3 million invested there,” McMaster said.
But according to the SEC, Frost allegedly used new investor money to pay those interest payments.
“I wouldn’t want to physically harm him, but he needs to feel the pain, you know, because he’s going to bring pain to people who don’t deserve it,” McMaster said.
Earlier this month, Channel 2 Action News cameras were rolling as a court-appointed receiver removed boxes of financial records and hard drives from First Liberty’s offices. Frost was seen surrendering the keys.
Federal investigators said Frost used investor funds for personal luxury spending, including:
- $570,000 in political contributions
- $140,000 in jewelry
- A $20,000 Patek Philippe watch
- $335,000 to a rare coin dealer
In total, the SEC alleges Frost transferred more than $5 million to himself and his family.
McMaster learned the company had ceased operations while he was at a doctor’s appointment.
“They were taking my blood pressure. I said ‘Well, it’s going to be a little high,’” he said.
First Liberty had marketed heavily to Conservative media audiences and church organizations, promoting itself as part of the so-called “patriot economy.”
“The sad part is that he kind of hides behind Christianity, that he’s a Christian,” McMaster said.
In a statement through his attorney, Frost took responsibility for First Liberty and said he wanted to apologize for misleading people.
The court-appointed receiver, Gregory Hayes, has published a website for First Liberty investors so they can track the progress of the case.
“My job is to identify assets and determine what happened and recover what money I can for the investors and then eventually make a distribution to the investors in this matter,” Hayes said.
McMaster has tried to keep positive.
“I smile — probably even if you were cutting my leg off, I might smile,” he said.
But he did send Frost a text message.
Frost had last texted McMaster around the holidays, sharing a picture with his daughter and writing, “trying hard to make memories with my girls while I can.”
“I texted him back and said, ‘It’s going to be kind of hard to make beautiful memories now,’” McMaster said.
On Monday, the Georgia Secretary of State’s Office urged victims to complete a confidential survey to assist in the ongoing investigation. The office also asked that anyone affected by this case should file an official complaint.
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