The Securities and Exchange Commission has filed fraud charges against a Detroit-based hedge fund and its owner for allegedly engaging in a multiyear scheme that included misappropriating and misusing investors’ funds for personal use, including for jewelry, credit card payments and his wife’s business.
According to the SEC’s complaint, over the course of nearly five years, Andrew Middlebrooks allegedly deceived investors in his hedge fund, EIA All Weather Alpha Fund I, LP, by making repeated false statements about the fund’s performance and total assets. He allegedly provided falsified investor account statements, lied about the fund having an auditor, and created and disseminated fake audit opinions to investors. The SEC also alleges that Middlebrooks used new investor money to make Ponzi-like payments to earlier investors in the fund in order to trick them into believing that the fund was profitable.
Middlebrooks and his firm, EIA All Weather Alpha Fund I Partners LLC, told investors that the hedge fund had earned cumulative returns of up to 2,500% from its inception through January 2022. However, the SEC alleges that the fund had in fact suffered “catastrophic” trading losses of approximately $27 million.
“As we allege in the complaint, Middlebrooks lured investors by touting extraordinary performance returns and then concealed the truth of his fraud, including by fabricating documents provided to investors,” C. Dabney…
