INVESTORS: EIA All Weather Alpha Fund I Partners LLC and its owners Andrew Middlebrooks charged with fraud by SEC.
On May 25, 2022, the SEC announced fraud charges against Detroit-based EIA All Weather Alpha Fund I Partners LLC (EIA) and its sole owner, Andrew M. Middlebrooks, for allegedly engaging in a multi-year scheme that included the misappropriation and misuse of investors’ funds. To halt the ongoing fraud, the SEC obtained a temporary restraining order and an asset freeze against EIA and Middlebrooks.
According to the SEC’s complaint, from at least mid-2017 to April 2022, EIA and Middlebrooks deceived investors in their hedge fund, EIA All Weather Alpha Fund I, LP, by making repeated false statements about the fund’s performance and total assets, providing falsified investor account statements; misrepresenting that the fund had an auditor;,and creating and disseminating a fake audit opinion to investors. The complaint also alleges that EIA and Middlebrooks misused new investor funds to make Ponzi-like payments to older investors in the fund in order to continue to deceive investors into believing the fund was profitable. Middlebrooks also allegedly misappropriated investor funds for personal use, including for jewelry and credit card payments.
The SEC charged EIA and Middlebrooks with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC’s complaint also charges Middlebrooks, in the alternative, with aiding and abetting EIA’s violations of the Advisers Act. The SEC seeks injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties against EIA and Middlebrooks. The SEC also charged EIA All Weather Alpha Fund I, LP, EIA All Weather Fund Partners II, LLC, and Shop Style Shark, LLC as relief defendants.
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