Georgia GOP group leader tied to First Liberty fined $500K, referred to DA
A financial adviser and leader of the far-right Georgia Republican Assembly has been fined $500,000 by the Georgia Secretary of State’s Office and referred to a district attorney for potential criminal prosecution over allegations he deceived investors in First Liberty Building & Loan.
It’s the latest fallout from the collapse of First Liberty, a failed lender federal regulators have labeled a $140 million Ponzi scheme, and a sign that the state’s investigation is spreading to more people and firms that were in its orbit.
Nathaniel Darnell of Powder Springs has served as president of the Georgia Republican Assembly, a conservative insurgency group once allied with First Liberty founder Brant Frost IV and his family, and worked as a financial adviser and insurance broker.
Darnell previously worked for notable Republican politicians including Tom Graves and Casey Cagle, and was once executive director of the Cobb County Republican Party, according to GRA’s website.
In its cease-and-desist order dated Tuesday, Georgia Secretary of State Brad Raffensperger’s office alleged Darnell used religion and shared political views to recruit some of his clients and steered them toward investments in First Liberty.
Darnell, who worked for Bankers Life Advisory Services, sold unregistered First Liberty investments to nearly four dozen clients without telling his employer, the complaint said, and concealed from clients and his employer that he earned commissions. Those commissions totaled nearly $250,000 over several years.
In a written statement, Darnell’s attorney Douglas Gilfillan said: “Mr. Darnell denies the allegations in the Emergency Order. Mr. Raffensperger has rushed to judgment and improperly rushed to the press for his own political gains.”
“Although we previously asked the Secretary of State for the chance to discuss this matter before it took any action, the Secretary of State ignored that request and did not provide us an opportunity to address these allegations before making them public,” Gilfillan said in the statement. “Although we have sympathy for those who lost money, we will continue to defend Mr. Darnell in this matter.”
Darnell was subpoenaed last year in the state’s probe of First Liberty.
This week’s order barred Darnell from activity as an investment adviser or agent, along with the half-million-dollar civil penalty.
The order said Darnell violated his fiduciary duties and “engaged in manipulative conduct when he preyed on senior citizens to invest substantial amounts of their retirement” into First Liberty. It also said he engaged in dishonest and unethical practices in the securities business.
“This is our second order of several seeking the maximum civil penalty and criminal referrals. Exploiting faith and politics for an affinity fraud warrants the full $500,000 fine,” Raffensperger said in a written statement.
Raffensperger’s office, in a letter to Cobb County District Attorney Sonya Allen, wrote that it conducted an investigation into violations of Georgia law by Darnell and was referring the matter to her office for potential criminal prosecution.
Another referral letter went to the state insurance commissioner. Darnell still held active insurance agent licenses as of Tuesday with about 22 insurance companies, according to the order.
In his statement, Raffensperger said under state law the fine money collected by his office would go to the state and not victims, and urged state lawmakers to pass legislation to allow victims to “recover their hard-earned money.”
A widening probe
The U.S. Securities and Exchange Commission last July accused Frost IV in a lawsuit of orchestrating a $140 million Ponzi scheme that funneled millions to the family and to boost conservative causes. First Liberty’s assets were frozen by federal authorities and Frost IV publicly apologized. No criminal charges have been filed so far in that case.
State investigators, meanwhile, have pursued their own investigations into campaign finance issues and alleged violations of state securities laws.
That same month, the state ethics commission charged the Georgia Republican Assembly PAC with 61 civil violations of state campaign finance laws, accusing it of illegally trying to sway elections. It later added the Georgia Republican Assembly, the organization led by Darnell, as a defendant.
Darnell previously stressed that the PAC was “completely separate” from the organization and that only the Frost family had oversight. He said the PAC disbanded last June, shortly after Frost family members resigned from the GRA in a broader revolt over the organization’s direction.
More than 150 people submitted complaints to the Secretary of State’s Office after its investigation into First Liberty began. Raffensperger’s office became aware of Darnell “through conversations with complainants.”
Darnell was close friends with the Frost family, with the founder’s son, Brant Frost V, as his main contact at First Liberty, according to the order.
Last week, Raffensperger’s office barred Frost V from selling securities, slapped him with a $500,000 fine and sent a criminal referral to Coweta Judicial Circuit District Attorney Herb Cranford.
Darnell was a registered broker dealer agent and investment adviser representative with Bankers Life, but his registration was terminated last September because of participation in unapproved private securities transactions, failure to disclose outside business activities and using off-channel communication with clients, the order said.
Darnell placed 45 people into First Liberty investments, Most of them were his clients at Bankers Life or related to his clients, and most were 60 years old or older.
Attempts to reach a representative of Bankers Life were not immediately successful.
Darnell had completed a questionnaire saying he was not engaged in outside business, the complaint said. He also texted and emailed investors with his personal device and personal email, against company policy, the state said.
He sold nearly $6.7 million in investments into First Liberty, the complaint said. He deposited commissions into an account for a company he created called Perservero Properties, which the state said he told Bankers Life was a house flipping business.
The Perservero funds were used by Darnell for purchases at liquor stores, clothing stores and other retailers, to make payments on a credit card used for personal expenses, political contributions and other expenses, and to make payments on a car loan for a 2019 Lexus RX, the complaint said.
The order said Darnell breached his fiduciary duty to his clients when placing them in First Liberty investments.
“Darnell often placed over fifty percent (50%) of a client’s net worth into First Liberty investments, despite the client’s stated investment objective and risk tolerance,” according to the document.
‘We fear it is a total loss’
One investor who met Darnell through the Georgia Republican Assembly said Darnell “used his political and religious views to gain our trust.”
Darnell told the investor, who was identified only as Investor #1 in the order, that the First Liberty investment “guaranteed” 15% returns, the order said.
The investor and his wife put $350,000 of their retirement savings into First Liberty, and said: “The fact that First Liberty and its owner claimed to share our political and religious values also made Darnell’s recommendation to invest in the First Liberty investment safe,” according to the order.
“To date, we have not received any of our principal back and we fear it is a total loss,” the investor said.
There were signs some of Darnell’s dealings with Investor #1 raised red flags with Bankers Life, the complaint shows.
In October 2023, a supervisor emailed Darnell about a $151,000 withdrawal from a retirement account made that month by a client, concerned “elder abuse” might be an issue.
“What did the client state as their reason for this request, if any? Did you verbally speak with the client? … Do you have any concerns over this transaction?” the supervisor asked, according to the document.
Darnell said he had spoken to the client.
“The reasons he gave me for wanting to transfer the funds was that he found out about a new opportunity that he had not known about previously, and that it was better than anything else anyone had discussed with him,” Darnell wrote, according to the document. “He seemed to be fully aware and in control of the situation. So, no, I do not have any concerns about elder abuse in his situation.”
But Darnell did not disclose he recommended the investor withdraw the money, that the investment was in First Liberty or that Darnell earned a commission on the deal, the Secretary of State’s Office said.
Another investor who put a substantial amount of her retirement funds into a First Liberty Note told Darnell that she “put faith and trust in you as a Godly man.”
“And I am praying to God, not just morning and night, I pray all day long so that he will take control of this so that we can get our money back,” she said, according to the order.
About the Authors
Greg Bluestein is the Atlanta Journal Constitution's chief political reporter. He is also an author, TV analyst and co-host of the Politically Georgia podcast.
