Kurta Law Hedge Fund Fraud Lawyers Investigate All Weather Alpha Fund

Hedge fund fraud lawyers want to speak with investors in EIA All Weather Alpha Fund I LP. The SEC alleges in a recent complaint that Andrew Middlebrooks used a Detroit-based advisory firm called Excellence in Investing in Action (EIA) to solicit $39 million from over 100 investors. All Weather Alpha Fund allegedly functioned as a Ponzi scheme—instead of using investor money for legitimate investments, Andrew Middlebrooks allegedly paid off earlier investors and misappropriated funds for his personal use.  

Andrew Middlebrooks also allegedly provided customers with falsified financial documents, misled investors into believing that the fund had been subject to an audit and provided customers with a fake audit opinion.

Hedge Fund Fraud: What Investors Need to Know

Hedge funds are uniquely vulnerable to fraud. Many hedge funds do not have to register with the SEC, which means information about the fund’s strategy may not be public. Investors often simply trust that their hedge fund manager has their best interests in mind.

Too often, fraudulent hedge fund managers are only out to line their own pockets. If you lost money through a hedge fund, contact one of the hedge fund fraud lawyers at Kurta Law today.

What Was the All Weather Alpha Fund Investment Strategy?

Andrew Middlebrooks purported to use a long-short equity investing strategy to make money for investors. These types of funds invest in certain stocks that they expect to appreciate in the long run while simultaneously “shorting” other stocks. When an investor shorts a stock, they essentially place a bet that it will lose money.  

The SEC Warns: Investors Should Always Research Hedge Fund Managers

Hedge fund investors rely on managers to generate impressive returns for their investment portfolio. The SEC encourages investors to research their hedge fund manager using BrokerCheck and Investment Advisory Public Disclosure (IAPD). Andrew Middlebrooks does not appear on either, meaning that he has registered as neither a stockbroker nor a financial adviser.

EIA is also not registered as an advisory firm with the SEC. Andrew Middlebrooks was also the sole member of EIA. According to the SEC, EIA “exercised ultimate authority over [All Weather Alpha Fund].”

If an advisory firm does not appear in IAPD, investors should steer clear.

Andrew Middlebrooks and EIA’s Misrepresentations to Investors

The SEC alleges that Andrew Middlebrooks represented to investors that the All Weather Alpha Fund had enjoyed returns of more than 2,500% since the fund began. Contrary to this claim, the SEC alleges that the Fund had in fact suffered losses of approximately $27 million.

Andrew Middlebrooks allegedly claimed that the Fund had an auditor who would provide audited financial statements. Indeed, EIA did provide investors with financial reports, but the SEC alleges that the reports were fabricated and engineered to mislead investors.

What Did Andrew Middlebrooks Allegedly Do with Investor Funds?

According to the SEC, Andrew Middlebrooks misappropriated investor money for his personal use. He allegedly transferred at least $470,000 to his wife’s business, Shop Style, and made over $750,000 in transfers to his personal bank account. He also allegedly used $64,000 to buy jewelry.

The SEC alleges that Andrew Middlebrooks also paid approximately $9.5 million in Ponzi-like payments to previous investors. When select investors redeemed their investments, he paid them the original amount of their investment plus “phony returns.” In reality, there were no returns on the investor’s money, since the Fund had suffered enormous losses.

When to Speak with a Hedge Fund Fraud Lawyer

If you are struggling to make withdrawals from a hedge fund, or if you believe any of the documents provided by your hedge fund manager may have been fabricated, you should contact a hedge fund fraud lawyer. Our attorneys offer free case evaluations and can help you recover your losses as efficiently as possible. Call (877) 600-0098 or email info@kurtalawfirm.com.