The Alabama Securities Commission is investigating any possible impact for the state and its investors from what federal regulators called a Ponzi scheme in Georgia, an operation that donated to the campaigns of several Alabama political candidates.

“We have been in contact with authorities in Alabama and Georgia, and have received numerous requests for information regarding this matter,” ASC Director Amanda Senn said in a statement Monday.

“We have opened in inquiry into the matter and will ensure that the interests of the State of Alabama and its investors are protected.

“Further public comment by us at this time would be inappropriate.”

Alabama Secretary of State Wes Allen, who serves as the state’s top election official, issued a statement Monday calling on the Alabama candidates to return the donations to a receiver appointed by the federal court in the federal case.

“I take allegations of financial fraud seriously, especially when that fraud bleeds into campaign finance,” Allen said.

“I encourage any Alabamians who have been involved to cooperate fully with law enforcement, including the SEC and our Alabama Securities Commission to ensure that the victims who have been misled may be made whole.”

At least two of the candidates who got money had already said they intended to do that.

Last week, the federal Securities and Exchange Commission announced that it filed charges against First Liberty Building & Loan, LLC and its founder and owner Edwin Brant Frost IV in connection with a Ponzi scheme that defrauded about 300 investors of at least $140 million.

The SEC said Brant’s operation, based in Newnan, Ga., told investors their money would be used for bridge loans to small businesses seeking Small Business Administration loans and promised returns of up to 18%.

“Since at least 2021, First Liberty operated as a Ponzi scheme by using new investor funds to make principal and interest payments to existing investors, according to the complaint,” the SEC said.

“The complaint further alleges that Frost misappropriated investor funds for personal use, including by using investor funds to make over $2.4 million in credit card payments, paying more than $335,000 to a rare coin dealer, and spending $230,000 on family vacations.”

Some of the money went to political candidates in Alabama.

State Auditor Andrew Sorrell and his political action committee, Alabama Christian Citizens, accepted $71,000 in campaign donations from the Frost family and their companies. Sorrell is running for secretary of state.

Sorrell said in a statement last week that he plans to return the donations so Frost’s investors can recoup some of what they lost.

“One of the individuals responsible for the scheme donated personally and through his company to dozens of conservative Republican campaigns and political action committees across the southeast, including mine, and I will return the contributions to a court-appointed receiver as soon as the process is available,” Sorrell said in a prepared statement first reported by Alabama Reflector.

Sorrell’s PAC also loaned First Liberty Building and Loan $29,000 in April 2024.

Before doing so, Sorrell requested an advisory opinion from the Alabama Ethics Commission on whether using campaign funds for such an investment violated the state’s Fair Campaign Practices Act.

The Ethics Commission said the FCPA did not prohibit the investment.

Other Alabama politicians who got campaign contributions from Brant or his entities included state Rep. Benjamin Harrison, R-Elkmont, who received $22,500, and Alabama State School Board member Allen Long, R-Florence, who took in $40,000.

Harrison told Alabama Reflector last week that he would return the money after learning about the alleged Ponzi scheme.

“I am committed to making sure I do everything in my power to support the victims of this financial tragedy,” he said.

Federal campaign records show Mo Brooks received $4,575 for his failed U.S. Senate campaign and Rep. Barry Moore received $3,300.