CFTC charges Andrew M. Middlebrooks – Pool Scheme

CFTC Charges Michigan Commodity Pool Operator and His Company with Sales Solicitation Fraud as Part of a Commodity Pool Scheme

Washington, DC — The Commodity Futures Trading Commission today announced it filed a civil enforcement action in the U.S. District Court for the Eastern District of Michigan against Andrew M. Middlebrooks and his firm EIA All Weather Alpha Fund I Partners, LLC, a Delaware company, based in the Detroit, Michigan area.  The complaint alleges Middlebrooks and his company engaged in a scheme that fraudulently solicited individuals in the U.S. and elsewhere to trade commodity interests, among other financial products, through a commodity pool called EIA All Weather Alpha Fund I, LP.  The complaint further alleges Middlebrooks and his company solicited, accepted, and pooled millions of dollars from dozens of fund participants.

In its continuing litigation, the CFTC seeks full restitution to defrauded fund participants, disgorgement of any ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA), as charged.

Case Background

The complaint alleges that as early as mid-2017, Middlebrooks and his company began soliciting individuals to invest in the fund.  In doing so, they repeatedly made numerous materially false and misleading statements and omissions in order to, among other things, lure new fund participants and convince existing fund participants to maintain or increase their contributions to the fund.  As alleged, these misrepresentations and omissions included claims the fund was extraordinarily profitable when in fact it suffered catastrophic trading losses; claims grossly exaggerating the amount of assets under management in the fund; claims the fund’s financial statements were audited by an outside auditing firm when in fact they were not; and false claims the fund had a five- or six-member advisory board comprised of individuals with significant experience in the financial and investment industries.  The defendants made these false claims, in part, by issuing false reports to existing and prospective fund participants in the form of falsified monthly account statements and fabricated financial statements, among other things.

Parallel Civil Action

On May 18, 2022, the Securities and Exchange Commission filed a civil injunctive action against Middlebrooks and his company in the same court, alleging conduct similar to that alleged in the CFTC’s complaint.

The Division of Enforcement staff responsible for this matter is Daniel Jordan, James Deacon, Erica Bodin, and Rick Glaser.

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SOURCE: Commodity Futures Trading Commission (CFTC)