By Mason Edwards
Chattanooga Times Free Press, Tenn.
(TNS)
Three years after Chattanooga accounting firm Croft & Frost collapsed, federal regulators filed a civil lawsuit seeking to stop the firm’s owners and a former salesman from offering or selling investments to others.
The U.S. Securities and Exchange Commission filed the complaint Sept. 11, accusing Jonathan Frost, 43, and Paul Croft, 45, of securities fraud and Matthew Dira, 48, of other violations of federal securities laws.
The complaint alleged Croft and Frost raised about $64 million from more than 230 investors between January 2021 and September 2023, using at least $53 million for purposes other than what investors were told.
Frost previously pleaded guilty to three federal financial crimes in a parallel criminal case, according to a press release about the litigation.
The civil complaint broadens the federal scrutiny beyond Frost, naming Croft and Dira as defendants and detailing alleged misconduct across seven investment funds.
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While several investment fund notes did not specify how proceeds would be used, the complaint alleged that investors were told their money would be used for purposes including small-business loans, real estate or developing a hydrogen power plant.
Croft and Frost allegedly funneled nearly $33 million of investor funds to the Chattanooga accounting firm to cover business salaries and commissions, according to the lawsuit.
The complaint said the pair misappropriated investor funds to meet a variety of cash needs, including paying exorbitant interest and fees on loans to keep the tax business operating and Ponzi-style payments to existing investors.
Croft and Frost never told investors they were receiving direct compensation, the lawsuit said. Regulators alleged about $11 million was used for the pair’s direct personal benefit, including custom suits, jewelry, private flights, yacht charters and luxury goods.
“Croft used these payments to acquire multiple exotic cars such as a Maserati and a Ferrari,” the lawsuit said, “and personal residences in Chicago and Miami.”
According to the complaint, Frost told Croft in an April 2022 text that he needed to raise more investments for one fund, and Croft questioned what happened to the almost $2.1 million Frost had recently raised.
“Frost responded, ‘Yes but that’s for us bro :),'” the lawsuit said, “to which Croft replied with the love emoji.”
Frost consented to a deal, subject to court approval, that would permanently bar him from violating the same federal provisions he’s charged with and from selling or buying any security except for his personal accounts, and order him to pay fees and a civil penalty in amounts to be determined by the court, the Securities and Exchange Commission said in a press release.
Dira worked for Croft and Frost as a securities salesman and administrator, selling investment products and managing other sales employees, according to the complaint.
The regulators alleged Dira continued selling investments even after receiving emails in September 2022 suggesting money from new investors was needed to repay earlier ones, the lawsuit said.
Meanwhile, he began receiving complaints from investors who were not receiving principal and interest payments, according to the regulators.
He continued to sell to new investors, the complaint said, receiving at least $500,000 in salary and commissions between 2021 and 2023.
The complaint accused Croft, Frost and Dira of violating sections of the Securities Act of 1933 and Securities Exchange Act of 1934. Dira was also accused in the suit of acting as an unregistered broker.
The lawsuit asks a federal judge to permanently bar all three men from participating in the issuance, purchase, offer or sale of securities, except for transactions involving their own personal accounts.
Regulators are also seeking to permanently bar Croft and Dira, 48, from acting or associating with brokers, dealers or investment advisers, according to the suit.
The agency wants the defendants to be ordered to surrender any allegedly ill-gotten gains, pay a civil penalty and face any other relief the court deems appropriate.
Securities and Exchange Commission spokesperson David Ausiello said by email the regulators declined to comment on the matter beyond the public filings.
Attorney Lee Davis said by text he represents Frost, but due to the ongoing nature of the case, he said he will not be commenting outside of court. Croft’s attorney, Melinda Power, said by phone she would decline to comment at this time.
The Chattanooga Times Free Press reached out to Dira’s attorney with an email and voicemail. Responses will be published online when received.
Frost pleaded guilty in February to three federal financial crimes involving conspiracies to commit tax fraud, wire fraud and money laundering as part of a plea deal. He has remained free on a $10,000 bond.
A nearly $50 million civil judgment was entered against Frost and three companies tied to him in May.
The 2023 lawsuit accused Frost and other defendants of running a clean energy investment scheme that used about 99% of investor funds to prop up other businesses and pay personal expenses.
Frost’s federal plea agreement set maximums of up to 20 years in prison on each of the wire fraud and money laundering conspiracies and up to five years for the tax fraud conspiracy.
Photo caption: Jonathan Frost (via his YouTube page)
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© 2026 the Chattanooga Times/Free Press (Chattanooga, Tenn.). Visit www.timesfreepress.com. Distributed by Tribune Content Agency LLC.
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