Alabama Secretary of State Seeks Return of Ponzi Scheme Funds
Alabama’s Secretary of State, Wes Allen, is requesting the return of contributions made to Alabama Republicans that originated from a large Ponzi scheme, estimated to be worth around $140 million.
On Monday, he issued a press release urging those who received the funds to cooperate with the U.S. Securities and Exchange Commission’s investigation into Edwin Blunt Frost IV, the Georgia investor at the center of the allegations. “I take financial fraud allegations seriously, especially when it involves campaign finance,” Allen stated. He added that it is crucial for recipients to work with law enforcement to ensure victims are compensated.
The SEC filed a lawsuit against Frost on July 10, alleging he defrauded about 300 investors between 2014 and 2025, collecting approximately $140 million through deceptive practices. It’s reported that about $570,000 of that amount was donated to political campaigns. Frost has been a significant supporter of Alabama’s Republican Party.
Detailed records indicate that Frost and his related businesses contributed at least $132,000 to various Alabama politicians and their Political Action Committees (PACs). Those who received funds include Rep. Benjamin Harrison, Alabama State Board of Education member Allen Long, and State Auditor Andrew Sorrell, who is currently campaigning for Secretary of State.
Sorrell has reported receiving over $71,000 from the Frost family and associated companies. In an interesting twist, records from April 2024 reveal that a PAC labeled Christians in Alabama provided a $29,000 loan to First Liberty Building and Loan, one of Frost’s enterprises.
Frost Corporation has been identified as Sorrell’s largest donor in his Secretary of State bid. Such loans made by PACs, aimed at influencing electoral outcomes, are legal under Alabama Election Law. Sorrell expressed his frustration, saying, “I am among the many who lost money when the federal government unveiled that First Liberty Building and Loan was scamming investors… It’s important that all recovered funds go back to the investors, not the scammer.”
Harrison received $22,800 directly from Frost and had previously taken $40,000 during an Alabama campaign from Frost’s company, First National Investments.
Other notable politicians, including former U.S. Representative Mo Brooks and current U.S. Representative Barry Moore, also received donations from Frost’s firm during their campaigns. While this represents a sizable amount of money, the implications of these contributions are now under scrutiny.
Frost allegedly provided agreements to investors promising returns between 8-18% annually through various lending mechanisms, referred to by the SEC as “bridge loans.” Investors were informed that these loans would be serviced using business management loans or other commercial loans. However, it seems many of these loans defaulted, and the promised payments were not made, leading to frustration among investors.
The SEC claims that Frost’s company benefited unfairly from funds without delivering the promised returns to investors. Furthermore, it is alleged that Frost misused investor money for personal expenses exceeding $5 million. These expenditures included rare coins, luxury watches, and significant credit card payments.
The SEC also noted that Frost financed operations of several companies with investor funds and had recently withdrawn $100,000 for personal use. The scheme began in 2014, expanding to solicit a broader investor base in 2024 via promotions on conservative talk radio.
While Allen’s office is responsible for overseeing campaign finance, they cannot investigate or enforce laws regarding these contributions. Instead, they have directed recipients to cooperate with the appointed federal overseers.
In a similar vein, Georgia’s Secretary of State, Brad Raffensperger, has also called for the return of funds contributed by Frost, aiming to ensure that victims of the alleged fraud receive proper restitution. Notable figures in neighboring states, including Georgia Governor Brian Kemp and Florida Governor Ron DeSantis, have also been linked to Frost’s contributions.
