Promoters Siphoned $64 Million for Lavish Lifestyles, Ponzi Scheme!

SEC v. Paul Thomas Croft, Jonathan David Frost, Matthew William Dira — U.S. Securities and Exchange Commission Litigation Release No. 26638, dated September 14, 2026.

The SEC charged Paul Thomas Croft, Jonathan David Frost, and Matthew William Dira with a $64 million offering fraud. They allegedly raised funds from over 230 investors by selling promissory notes and LLC interests, but instead of using the money for promised profits, they misappropriated it for business expenses, personal luxuries, and Ponzi-style payments. Dira continued selling investments even after being warned of a potential Ponzi scheme.

In Plain English

Imagine you give money to two people who promise to invest it for you to make a profit. Instead, they take your money and use it to pay for their own fancy things, run a different business, and pay off earlier investors to keep the scam going. A third person, who sold you the investment, kept selling it even after hearing it might be a scam. The SEC stepped in to stop this fraud.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. The Setup Between January 2021 and September 2023, Paul Thomas Croft and Jonathan David Frost allegedly created entities, including Croft & Frost, PLLC, to offer and sell securities. These securities were presented as promissory notes and membership interests in limited liability companies.
2. Raising Millions Through these offerings, Croft and Frost successfully raised approximately $64 million from more than 230 investors. The funds were solicited based on representations of profit-making activities.
3. Misappropriation of Funds Instead of using the investor funds as promised, Croft and Frost allegedly misappropriated them. A significant portion was used to cover the expenses of a separate tax preparation business.
4. Funding Luxury Lifestyles Further alleged misappropriation included financing the personal luxury lifestyles of Croft and Frost. This diverted investor capital away from the purported investment opportunities.
5. Ponzi-Style Payments To maintain the illusion of a successful operation and keep existing investors satisfied, Croft and Frost allegedly used new investor funds to make Ponzi-style payments to earlier investors.
6. Salesperson's Continued Solicitation Matthew William Dira, acting as a securities salesperson and administrator, continued to solicit and sell millions of dollars' worth of promissory notes to investors.
7. Ignoring Warnings Dira's continued sales efforts occurred even after he had received communications warning him that Croft and Frost were likely running a Ponzi scheme. He earned over $500,000 in salary and commissions during this period.

The Enforcement Action

On September 11, 2026, the SEC filed fraud charges against Paul Thomas Croft, Jonathan David Frost, and Matthew William Dira in the U.S. District Court for the Eastern District of Tennessee, alleging a $64 million offering fraud. The complaint alleges that Croft and Frost misappropriated investor funds for business expenses, personal lifestyles, and Ponzi payments, while Dira continued to sell securities despite warnings. Frost consented to a bifurcated judgment, subject to court approval, that would permanently enjoin him from violating federal securities laws and order him to pay disgorgement, prejudgment interest, and a civil penalty. Frost also pleaded guilty to criminal fraud and money laundering charges in a parallel criminal case.

Named in this action: Paul Thomas Croft, Jonathan David Frost, Matthew William Dira.

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