Over $39 million was involved in a scheme that resulted in a federal conviction against a Detroit investment fund owner, the U.S. Attorney’s Office for the Eastern District of Michigan reported.
Andrew H. Middlebrooks has been sentenced to 100 months in federal prison after pleading guilty to charges of wire fraud in the case, according to the press release issued Monday. The scheme involved obtaining over $39 million from investors “by means of false and fraudulent material pretenses, representations, and promises.”
The Federal Bureau of Investigation led the investigation, assisted by the Securities and Exchange Commission.
“This financial charlatan used sophisticated methods and a complex web of deception to trick unsuspecting victims into trusting him with their money. Con artists like this will be prosecuted to the full extent of the law,” United States Attorney Jerome F. Gorgon Jr. said in his statement.
Middlebrooks was the majority owner, chief executive officer, and portfolio manager for EIA All Weather Alpha Fund, the district attorney’s report said. He solicited clients for the fund by saying he could get large returns for investors. Instead, the report said, the fund “suffered catastrophic losses.”
Instead of informing the current investors that the fund was failing, he “solicited new investors with false statements about the fund’s performance and lulled existing investors by lying to them about the returns their investments generated.”
An example cited by the district attorney involved a 2019 report that falsely claimed the fund’s track record had a cumulative return of 476.81%, with 81.82% of monthly trading showing a profit.
When the scheme collapsed, there were losses to 97 investors.
“The sentencing of Andrew Middlebrooks underscores the significance of white-collar crimes and the lasting harm they impose on hard-working Americans,” said Reuben Coleman, Acting Special Agent in Charge of the FBI Detroit Field Office. “White-collar crimes threaten the integrity of our financial systems and undermine the trust and security of communities.”
