U.S. Securities and Exchange Commission
Litigation Release No. 18362 / September 25, 2003
(Case No. CV-03-1862-PHX-FJM)(D. Ariz.)
SEC Halts Ongoing Hedge Fund Fraud
The Securities and Exchange Commission ("Commission") announced that
on September 25, 2003, the Hon. Frederick J. Martone, United States
District Judge for the District of Arizona, issued a temporary
restraining order halting an ongoing fraudulent scheme to sell
unregistered interests in a hedge fund called Millennium Capital Hedge
Fund, L.P. ("Millennium") of Gilbert, Arizona. In addition to
Millennium, the Commission's complaint also charges two investment
advisers Millennium Capital Group, LLC ("MLLC") of Gilbert, Arizona,
and Andreas F. Zybell, age 48, of Homosassa Springs, Florida.
The complaint alleges that Millennium seeks to raise $5 million
through the sale of limited partnership interests. As alleged in the
complaint, the defendants have raised at least $1.4 million, including
$697,000 since June 30, 2003, from investors in Arizona, California,
Illinois, Iowa, New Mexico, Pennsylvania, and Utah. The complaint also
alleges that the defendants represent that MLLC and Zybell would use
investor funds to trade securities for Millennium, including publicly
traded stocks and options. The complaint further alleges that the
defendants falsely represent to investors that Millennium achieved a
46% return for the twelve months ended June 30, 2003, when, in fact,
Millennium had substantially lower returns of less than 14%. Finally,
the complaint alleges that the defendants fail to disclose to
investors that the Nevada Secretary of State revoked Millennium's
limited partnership status on June 1, 2003, thereby prohibiting
Millennium from conducting operations as a limited partnership.
The Court granted the Commission's applications for a temporary
restraining order; granted expedited discovery; and issued orders
freezing the assets of Millennium's brokerage account and prohibiting
the destruction of documents by the defendants. The temporary
restraining order bars Millennium, MLLC, and Zybell from committing
securities fraud in violation of Section 17(a) of the Securities Act
of 1933 ("Securities Act") and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. The Court's order also
bars MLLC and Zybell from committing securities fraud in violation of
Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
Furthermore, the Court's order bars each of the defendants from
violating the securities registration provisions of Sections 5(a) and
5(c) of the Securities Act. The Court's order also bars Millennium
from violating the investment company registration provision of
SNIPPETS:
SEC Halts Ongoing Hedge Fund Fraud
The Securities and Exchange Commission announced that on September 25, 2003, the Hon.
Frederick J. Martone, United States District Judge for the District of Arizona, issued a
The complaint alleges that Millennium seeks to raise $5 million through the sale of limited
The complaint also alleges that the defendants represent that MLLC and Zybell would use
Finally, the complaint alleges that the defendants fail to disclose to investors that the
The Court granted the Commission's applications for a temporary restraining order; granted
The temporary restraining order bars Millennium, MLLC, and Zybell from committing securities
The Court's order also bars MLLC and Zybell from committing securities fraud in violation of
the Court's order bars each of the defendants from violating the securities registration
The Court's order also bars Millennium from violating the investment company registration
A hearing on whether a preliminary injunction and other relief should be issued against the
In addition to the interim relief granted on September 25, 2003, the Commission seeks a final
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