DETROIT – Andrew Middlebrooks is charged with running a Ponzi scheme that eventually imploded, losing investors millions of dollars along the way.
He promised huge gains, which went along with the considerable promise he showed becoming the first African American hedge fund manager in Michigan as a young man.
It’s looking like he’s come to a plea agreement with the federal government for defrauding the people who put their trust in him.
Middlebrooks made headlines as a child prodigy, learning about the stock market from his father. He later developed his own specialized research program to analyze stocks and funds in real-time and opened his fund called EIA All Weather Alpha Fund Partners in Detroit and later moved to Texas.
He got off to an award-winning start in 2017, but things didn’t take long to go south. On Wednesday (Oct. 12), the U.S. Attorney’s Office put out the information saying, “From the beginning of the scheme, Middlebrooks’ (sic) investments failed to produce the returns investors anticipated resulting in catastrophic losses. Rather than admitting that EIA’s fund was losing money, Middlebrooks, with intent to defraud, continued to solicit money and lied to investors about EIA’s investment performance.”
Middlebrooks assured the highly wealthy individuals he spoke with his new technology could get them massive returns. Court documents said those returns never materialized: “Middlebrooks reported positive returns of 135.74% in 2020 when he knew EIA had incurred losses of over $13 million. Middlebrooks took money from the fund for living expenses and transferred money from the fund to his wife’s business.”
Then it devolved into a Ponzi scheme.
“Middlebrooks paid over $9 million back to investors claiming the money represented returned generated through EIA trades. In fact, these payments came from new investor money. Losses to at least 100 investors exceeded $27 million.”
The case started back in May when the Federal Securities and Exchange Commission shut down EIA and then handed the case over to the U.S. Attorney.
Here is a statement from Middlebrooks’ attorney:
