SEC Alleges $64 Million Offering Fraud by Croft, Frost and Dira
SEC alleges Paul Croft, Jonathan Frost and Matthew Dira ran a $64 million offering fraud, raising funds from over 230 investors between 2021 and 2023.
Summary
In Litigation Release No. 26638 dated September 14, 2026, the SEC said it sued Paul Thomas Croft, Jonathan David Frost and Matthew William Dira on September 11 in the U.S. District Court for the Eastern District of Tennessee, case No. 1:26-cv-00257. The complaint alleges Croft and Frost used Croft & Frost, PLLC and other entities to raise approximately $64 million from more than 230 investors between January 2021 and September 2023 through promissory notes and LLC membership interests. Instead of funding represented profit-making activities, they allegedly supported a separate tax preparation business, financed luxury lifestyles and made Ponzi-style payments to existing investors.
Dira allegedly continued selling millions of dollars of promissory notes as a salesperson and administrator after communications warned Croft and Frost were likely operating a Ponzi scheme, earning more than $500,000 in salary and commissions. Croft and Frost face Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 claims. The release charges Dira under Exchange Act Section 15(a)(1) and lists Securities Act Section 17(a)(2) twice.
Subject to court approval, Frost consented to a bifurcated judgment imposing permanent injunctions, restricting securities activity except in his personal accounts, and requiring disgorgement, prejudgment interest and a civil penalty in amounts to be determined. Frost previously pleaded guilty to fraud and money laundering in United States v. Jonathan D. Frost, No. 1:26-cr-00004-TRM-CHS. Tiffany Kunkle and Justin Delfino investigated under Peter J. Diskin and Justin Jeffries; Paul Kim will litigate under M. Graham Loomis.
Positives
- Frost consented, subject to court approval, to permanent injunctions and restrictions on securities transactions outside his personal accounts.
- Disgorgement, prejudgment interest and a civil penalty would be determined after an SEC motion if the court approves Frost’s judgment.
- Frost previously pleaded guilty to criminal fraud and money laundering in parallel federal case No. 1:26-cr-00004-TRM-CHS.
- The SEC filed civil fraud charges against all three defendants on September 11, 2026.
Risks & concerns
- Approximately $64 million was allegedly raised from more than 230 investors through promissory notes and LLC membership interests.
- Investor funds allegedly financed a tax preparation business, luxury lifestyles and Ponzi-style payments instead of represented profit-making activities.
- Dira allegedly sold millions of dollars in notes despite warnings of a likely Ponzi scheme and earned more than $500,000.
- The alleged misconduct continued from approximately January 2021 through September 2023.
- Frost’s disgorgement, interest and civil penalty amounts remain undetermined and his consent judgment still requires court approval.