Most fraud cases turn on what the people running the scheme knew. This one has a third defendant, and the allegation against him is about what he was told.
The scheme, as alleged
Between approximately January 2021 and September 2023, the SEC says, Paul Thomas Croft and Jonathan David Frost sold promissory notes and membership interests in limited liability companies through entities including Croft & Frost, PLLC, raising approximately $64 million from more than 230 investors.
Where the money went, per the complaint (¶2):
Rather than using the funds for the profit-making activities that were represented to investors, Croft and Frost misappropriated investor funds to meet a variety of their cash needs, such as funding their tax preparation business; paying exorbitant loan interest and fees to keep the scheme and the tax preparation business operating; making Ponzi-style payments to existing investors; and funding their extravagant lifestyle of travel and luxury automobiles.
And the ending (¶3):
By the time their scheme collapsed in September 2023, Croft and Frost owed investors approximately $53 million.
Note what those two figures are. $64 million came in. $53 million was still owed when it stopped. The complaint does not state a total misappropriation figure, and the two numbers are not the same question — one is what was raised, the other is what was outstanding at collapse.
The salesman who was warned
The third defendant is Matthew William Dira. The complaint (¶4):
Defendant Matthew William Dira ("Dira") worked for Croft and Frost as a securities salesperson and administrator. Despite receiving communications warning that Croft and Frost were likely running a Ponzi scheme, Dira continued to sell millions of dollars' worth of promissory notes issued by Croft and Frost's entities, all while earning more than $500,000 salary and commissions.
Neither the release nor the complaint says who sent the warnings, when they arrived, or how much was sold afterwards. What it does say is that the selling continued.
The charges, and an error in the release
The complaint (¶5) charges Croft and Frost under Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5.
For Dira, the complaint (¶6) charges "Sections 17(a)(2) and 17(a)(3) of the Securities Act... and Section 15(a)(1) of the Exchange Act" — the last being the provision requiring broker registration.
The SEC's own published release renders that as:
charges Dira with violating Section 17(a)(2) and 17(a)(2) of the Securities Act
The same subsection twice. It is a typographical error in the government's public summary of its own case, and it is noted here rather than quietly fixed, because anyone citing the release rather than the complaint will copy it.
What has actually been resolved: almost nothing
Frost has consented to a judgment — but read what the consent contains:
Frost consented to the entry of a bifurcated judgment, subject to court approval, that would permanently enjoin him from violating the charged provisions of the federal securities laws and from participating in the issuance, purchase, offer, or sale of any security except for his own personal accounts, and order him to pay disgorgement, prejudgment interest, and a civil penalty in amounts to be determined by the Court upon motion by the Commission.
"Subject to court approval." "In amounts to be determined." No dollar figure has been set, nothing has been paid, and the injunction is not yet entered.
Frost has separately pleaded guilty in a criminal case — United States v. Jonathan D. Frost, No. 1:26-cr-00004-TRM-CHS (E.D. Tenn.) — to what the release calls "criminal fraud and money laundering charges." The complaint (¶13) dates that plea to February 11, 2026, on conduct "based largely on the same conduct as that alleged herein." The release names no U.S. Attorney's Office.
Croft and Dira have settled nothing. As to them this is an unproven complaint.
The complaint seeks permanent injunctions, a conduct-based securities participation injunction against all three, industry association bars against Croft and Dira, disgorgement with prejudgment interest from each defendant, and civil penalties. It does not seek an officer-and-director bar, and it does not seek an asset freeze or a receiver.
What is not in either document
- Nothing about the investors' money. Neither the release nor the complaint states that any investor has been repaid, that anything was frozen, or that any assets remain.
- No description of who the investors were. The release does not characterise them at all — no location, no occupation, no affinity group. This desk will not fill that in.
- No date for the warnings to Dira, no count of how many notes he sold after receiving them, and no statement of what he did in response.
- No explanation for the three-year gap. The scheme collapsed in September 2023. The complaint was filed in September 2026.
One more thing worth knowing
The filed complaint is 32 pages and 6.5 megabytes, and no computer can read it. The PDF contains no text layer and no images: every letter is drawn as a shape. It cannot be searched, copied, quoted by machine, indexed, or read aloud by a screen reader. To read this record's citations, the pages had to be turned into pictures and looked at.
That is the second document in a single day's filing on this desk with that property. The other is a Presidential determination whose statutory evidence pages are scans.