This is an opinion column.
Shakespeare warned us, neither a borrower nor a lender be, but in a Georgia Ponzi scheme, Alabama State Auditor Andrew Sorrell is somehow … both?
And also, a victim?
Sorrell says he was duped by a pyramid scam that has triggered headlines throughout the South and sent tremors through Republican circles. And, while he raked in campaign donations from the folks running that con game, he says he’s giving that money back so victims — like him? — might recoup their losses.
Also, he doesn’t want his opponents in next year’s race for Alabama Secretary of State giving him guff about it.
It’s a lot. And it’s messy. But let’s unpack it.
Last week, the Securities and Exchange Commission accused Edwin Brandt Frost IV and one of his companies, First Liberty Building and Loan, of running a scam on hundreds of investors. This week, Frost said in a public statement that he took full responsibility and would work to repay those who trusted him with their money.
The pretense of the scheme was to give short-term bridge loans to small businesses until they could secure longer-term credit through the Small Business Administration or other commercial lenders. Frost and his company would connect borrowers with investors, who could get up to 18 percent interest on their investments.
According to the SEC, only a few businesses took part in the program and most of those loans soured quickly. When that happened, Frost and his company began using money from new investors to pay off old ones.
A classic pyramid scheme, a la Bernie Madoff, to the tune of at least $140 million.
After Frost exhausted his social network of “friends and family,” he began soliciting investments through advertisements on talk radio programs such as the Erick Erickson Show and Hugh Hewitt, according to the SEC. Through these programs, the scheme targeted listeners and pitched the offer as a Christian investment opportunity.
Meanwhile, according to the SEC, Frost spent investor money on personal expenses, including $335,000 for rare coins, $20,800 for a watch, $140,000 for jewelry, $2.4 million for credit card payments — and $570,000 on campaign donations.
Most of those were in Georgia, where Georgia Secretary of State Brad Raffensperger has called on politicians to give the money back to a federal receiver.
But state and federal records show Frost, his family and businesses made donations in Alabama, too.
Alabama state Rep. Benjamin Harrison, R-Elkmont, received $22,500. Alabama State School Board member Allen Long, R-Florence, took in $40,000. Federal campaign records show Mo Brooks received $4,575 for his failed U.S. Senate campaign and Rep. Barry Moore received $3,300.
But none in Alabama appear to have received as much as Sorrell.
Together, Sorrell and a political action committee he runs called Alabama Christian Citizens accepted $71,000 from the Frost family and their companies.
Sorrell is running for Alabama Secretary of State. In that campaign, Frost has been his largest campaign contributor.
Sorrell says 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.
But here’s where Sorrell’s part in this story gets interesting — and how he now also says he’s a victim. He didn’t only accept campaign contributions from Frost and his companies, as the others did. Sorrell also invested money from his political action committee with Frost.
According to Alabama campaign finance records, Alabama Christian Citizens loaned First Liberty Building and Loan $29,000 in April 2024.
I have spent a lot of time looking at campaign finance records over the last 20 years, and I’ve seen some weird things. I once caught a lawmaker buying himself a golf cart — two, actually — and calling it a transportation expense. But this was the first time I had seen where a candidate or PAC loaned money to a bank. Usually, it works the other way around.
In his prepared statement, Sorrell had called such investments commonplace. In a follow-up, I asked him why.
“Survey the reports of most major PACs in Alabama and you will see that many participate in some form of interest-bearing return,” Sorrell said in a follow-up question. “That is what was meant by that comment.”
I have seen where PACs and campaigns might draw a smidgen of interest from a savings account or something similar, but I haven’t found anyone recording a loan made to a bank before. (And technically, First Liberty Building and Loan wasn’t a bank, but an uninsured commercial lender with a name that sounded kind of bank-like. Not that that makes things any better.)
However, there was a time when he wasn’t sure this was something he could do. I know this because, last year, he asked the Alabama Ethics Commission whether it was legal.
According to Commission records, Sorrell submitted six questions to them in 2024. Those questions make an interesting progression — the kind that, if your teenager asked them, you might want to know what exactly they were up to.
First, Sorrell asked whether he could invest in a certificate of deposit.
From there, he asked whether it must be FDIC-insured.
And then, what if it wasn’t a bank, but some other kind of something he could loan money to?
And finally, were there any restrictions at all?
In a formal opinion issued last April, the Commission told Sorrell that, as long as he didn’t mingle personal and political money, the law was silent.
“There are no restrictions on the types of investments a PAC or PCC could participate in beyond buying a bank CD or loaning money to earn interest,” the Commission wrote.
Less than two weeks later, Sorrell made the loan to Frost’s lending company.
So if the Commission gave him the legal all-clear to gamble with his political donors’ money, what does it matter if he blew it on a Ponzi scheme?
First, it’s a question of judgment. But more important than that, it’s a question he doesn’t want his opponents to ask.
Just three days ago — after the Ponzi scheme became public but before he was revealed as a one of its suckers — Sorrell challenged his Republican primary opponent, Caroleen Dobson, to sign a “Clean Campaign Pledge” to refrain from negative attacks on her opponent.
Sorrell doesn’t want Dobson saying anything mean about him.
Interesting timing, huh?
I’m just extrapolating out here, but I would presume such negative attacks might include Dobson asking whether Sorrell can recognize a Ponzi scheme when he sees one. I would if I were her.
Maybe his demand, just days before his foolish investment became public, was just weird timing. Maybe they aren’t related at all.
But if that’s a coincidence, then I have some unregistered securities I’d like to sell him.
Kyle Whitmire is the Washington watchdog columnist for AL.com and winner of the 2023 Pulitzer Prize. Subscribe to his newsletter, Alabamafication. It’s free.
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