SEC Halts Alleged Fraud by Detroit-based EIA All Weather Alpha Fund I Partners
On May 18, the U.S. Securities and Exchange Commission (SEC) filed a complaint for injunctive and other relief against Michigan-based EIA All Weather Alpha Fund I Partners, a purported financial advisory firm, and its owner, Andrew M. Middlebrooks. That action was approved by the courts on May 19, the day the SEC announced fraud charges against the company and its founder for allegedly “engaging in a multi-year scheme that included misappropriation and misuse of investors’ funds.”1
The emergency relief obtained by the U.S. District Court in the Eastern District of Michigan included a temporary restraining order against EIA and Middlebrooks and an asset freeze against the defendants and named relief defendants which included Shop Style Shark, LLC, an online women’s clothing store, of which Dionne Middlebrooks, Andrew Middlebrooks’ wife, is a managing member. The SEC alleges that Shop Style Shark received at least $470,000 from EIA’s fraudulent activity.2
The company’s website states that it is “the first minority-owned quantitative hedge fund manager based in Michigan” and that they “capitalize on inefficiencies in the global equity markets to generate attractive absolute returns.”3 Middlebrooks currently resides in Dallas, Texas, but lived in the Detroit area from 2017 through February 2020.
The company’s principal place of business is Novi, Michigan. EIA is not registered with the SEC or any state as an investment adviser.
The SEC alleges that from at least mid-2017 through the day of the injunction EIA fraudulently solicited $39 million from over 100 investors for the EIA All Weather Alpha Fund I hedge fund managed by Andrew Middlebrooks. According to the SEC complaint, Middlebrooks “wildly misstated the Fund’s performance” telling investors and potential investors that the Fund “had extremely successful trading performance, with cumulative returns upwards of 2,500 percent from the Fund’ s inception through January 2022.”4
The SEC claims that the fund had actually lost approximately $27 million. To cloak the Fund’s losses, Middlebrooks used $9 million of Fund money in Ponzi-like payments to Fund investors requesting redemption of their investments. Middlebrooks also claimed the Fund financials were audited when they were not and he fabricated financial statements and an audit report sent to Fund investors and prospective investors.
The SEC further alleged that in addition to transferring money to his wife’s business, he illegally transferred $750,000 of the Fund’s monies to his personal bank account and misappropriated $64,000 in Fund monies to pay for personal purchases of jewelry. The SEC claims that all of the Fund’s money is now gone.
Our Securities Law Firm in Detroit has been fighting for investor’s rights for more than 20 years. An experienced Securities Attorney can help investors recover their losses and hold negligent brokers accountable If you think your investment accounts have been compromised or mismanaged, contact our Michigan Securities Firm today and speak with an attorney.
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1 SEC Halts Alleged Ongoing $39 Million Fraud by Hedge Fund Adviser, 5/25/2022
Link: https://www.sec.gov/litigation/litreleases/2022/lr25399.htm
2,4 SEC Complaint for Injunctive and Other Relief, filed 5/18/2022
Link: https://www.sec.gov/litigation/complaints/2022/comp25399.pdf
3 EIA All Weather Alpha Partners Website
Link: https://eiaalphapartners.com/