UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA

Plaintiff Securities and Exchange Commission ("Commission") alleges as follows:

Jurisdiction and Venue

1. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d)(1) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d)(1), 78u(d)(3)(A), 78u(e) & 78aa, Sections 209(e)(1) and 214 of the Investment Advisers Act of 1940 ("Investment Advisers Act"), 15 U.S.C. §§ 80b-9(e)(1) &

80b-14, and Sections 42(d), 42(e)(1) and 44 of the Investment Company Act of 1940 ("Investment Company Act"), 15 U.S.C. §§ 80a-41(d), 80a-41(e)(1) & 80a-43. Defendants have, directly or indirectly, made use of the means or instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities exchange in connection with the transactions, acts, practices and courses of business alleged in this Complaint.

2. Venue is proper in this district pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), Section 27 of the Exchange Act, 15 U.S.C. § 78aa, Section 214 of the Investment Advisers Act, 15 U.S.C. § 80b-14, and Section 44 of the Investment Company Act, 15 U.S.C. § 80a-43, because certain of the defendants transact business, and the transactions, acts, practices and courses of conduct constituting violations of the federal securities laws occurred, within this district.

Summary

3. This case involves the ongoing fraudulent unregistered offer and sale of securities in the form of limited partnership interests in defendant Millennium Capital Hedge Fund, L.P. ("Millennium") by two unregistered investment advisers: defendant Millennium Capital Group, LLC ("MLLC"), which is Millennium's general partner, and defendant Andreas F. Zybell, who is MLLC's principal owner and a managing member (collectively the "Defendants"). The Defendants have offered and sold securities in Millennium since at least April 2002, and have raised at least $1.4 million from at least 28 investors, with $291,000 raised just in the first three weeks of September 2003. Currently, there is approximately $1.4 million worth of cash and securities in Millennium's brokerage account at Charles Schwab & Co., Inc. ("Schwab"), including securities held on margin.

4. The Defendants represent to investors and prospective investors around the country that their investment funds will be used to trade securities,including publicly traded stock and options. The Defendants falsely represent that Millennium has achieved a 46% return through its securities trading in the twelve months ended June 30, 2003. Millennium actually has achieved less than a 14% return in those twelve months. Furthermore, none of the Defendants disclose that on or about June 1, 2003, the Nevada Secretary of State revoked Millennium's partnership status, thereby prohibiting Millennium from conducting business as a limited partnership. Finally, Millennium has failed to register as an investment company.

5. The Defendants' conduct violates the securities registration and antifraud provisions, and Millennium also violates the investment company registration provisions, of the federal securities laws. By this action, the Commission seeks temporary, preliminary, and permanent injunctive relief; disgorgement with prejudgment interest of the Defendants' ill-gotten gains; an asset freeze; orders prohibiting the destruction of documents; and appointing a receiver over Millennium; and orders granting expedited discovery and accountings.

The Defendants

6. Defendant Millennium Capital Hedge Fund, L.P. purports to be a Nevada limited partnership with its main office in Gilbert, Arizona. On or about June 1, 2003, the Nevada Secretary of State revoked its partnership status, thereby prohibiting Millennium from conducting business as a limited partnership. It trades securities and claims returns of 46% in the twelve months ended June 30, 2003. Millennium is not registered as an investment company with the Commission, and no registration statement has been filed, or is in effect, with respect to the offer and sale of Millennium's securities.

7. Defendant Millennium Capital Group, LLC is a Florida limited liability company with offices, which it shares with Millennium, in Gilbert, Arizona. MLLC is Millennium's general partner, and Zybell is MLLC's principalowner and managing member. MLLC, at Zybell's direction, trades securities for Millennium. It is not registered as an investment adviser with the Commission.

8. Defendant Andreas F. Zybell, age 48, resides in Homosassa Springs, Florida. He is MLLC's principal owner and the only person identified as a managing member. Zybell is the person authorized to trade securities for Millennium through its account at Schwab. Zybell claims to have "many years experience in investing" and employing investment strategies, but he is not registered with the Commission.

Related Party

9. Western Financial Group, Inc., is a Nevada corporation based in Gilbert, Arizona. Western Financial was incorporated in 1994, and it provides marketing and administrative services to Millennium.

The Fraudulent Scheme

Millennium's Securities Offering

10. Since at least April 2002, Millennium has offered and sold securities in the form of limited partnership interests. Through private placement memoranda ("PPMs") dated April 1, 2002 and April 10, 2003, Millennium began offering for sale up to $5 million worth of its limited partnership units at $5,000 per unit. Financial statements do not accompany the 2003 PPM. The minimum purchase is $25,000, although Millennium in its discretion can accept a minimum investment of $15,000 during the initial six months of the offering.

11. In their efforts to sell limited partnership units, the Defendants represent that Millennium trades securities of public companies, including related options. The Defendants state that Millennium will engage in covered call

writing -- that is, purchasing securities such as stock and then selling call options, which grant the option purchaser the right to buy the securities Millennium owns at a specified price within a stated period of time. Millennium apparently does engage in some trading activity although, as set forth below, it has done so at amuch smaller rate of return than it has represented to investors and prospective investors.

12. The Defendants represent that investors share in the profits and losses of Millennium's trading program such that the investors collectively receive 99%, and MLLC receives 1% as Millennium's general partner. As further compensation, MLLC also receives a monthly management fee -- which is a percentage of the trading gains, if any, on stock equities and debt instruments --and overhead expenses as compensation. Investors share in the profits and losses of Millennium's trading program on a pro rata basis in accordance with the percentage of their respective ownership interests in the limited partnership.

13. The Defendants represent that investors may withdraw from the limited partnership after six months or invest additional funds at the beginning of each month. Some investors have made additional investments.

The Defendants' Sales Efforts

14. Millennium sells its securities to investors on a nationwide basis. Millennium has investors at least from Arizona, California, Illinois, Iowa, New Mexico, Pennsylvania, and Utah. The Defendants represent that Zybell, through MLLC, has hired an agent, Western Financial, to provide marketing and administrative services for Millennium. As part of its marketing effort, Western Financial prepared a newsletter under MLLC's name, dated July 1, 2003. The Defendants direct investors to send their completed subscription agreements and investment checks to what the Defendants identify as Millennium's International Marketing Office in Gilbert, Arizona.

15. Since the offering began, Millennium has raised approximately $1.4 million from investors. MLLC, in its newsletter sent to investors on or about

July 1, 2003, encourages existing investors to refer potential investors to Millennium, and also states, "Let us know who else we can help financially." Millennium is also raising increasingly more funds each month. In July, Augustand September 2003, Millennium raised approximately $170,000, $236,000, and $291,000, respectively.

16. Investor funds are deposited into Millennium's brokerage account at Schwab, where Zybell conducts Millennium's trading. Zybell is the only person authorized to trade and conduct other transactions in the account, and he receives copies of Millennium's brokerage account statements at his address in Florida.

Defendants Have Misrepresented Millennium's Purported Profitability

17. Since at least July 1, 2003, the Defendants have falsely represented that Millennium has achieved a 46% return through its securities trading in the twelve months ending June 30, 2003. Indeed, Millennium achieved less than a 14% profit during these twelve months. Nevertheless, investors have made additional contributions since the Defendants began making their false profitability claims.

Defendants Have Failed to Disclose that
Millennium's Limited Partnership Status Has Been Revoked

18. In their efforts to sell limited partnership units, the Defendants represent that Millennium is a Nevada limited partnership. But the Nevada Secretary of State's Office revoked Millennium's limited partnership status on or about June 1, 2003, because Millennium failed to file its annual list of officers and did not designate a registered agent in Nevada. As a result of the revocation, Millennium is not allowed to conduct its operations, including securities trading, as a limited partnership. Nevertheless, and even after the June 2003 revocation, the Defendants continue to offer and sell Millennium's limited partnership units but do not disclose to investors and prospective investors the revocation or its effect.

First Claim for Relief

Unregistered Offer and Sale of Securities
Violations of Sections 5(a) and 5(c) of the Securities Act
(Against Defendants Millennium, MLLC, and Zybell)

19. The Commission realleges and incorporates by reference ¶¶ 1 through 18 above.

20. Defendants Millennium, MLLC, and Zybell, and each of them, by engaging in the conduct described above, directly or indirectly, made use of means or instruments of transportation or communication in interstate commerce or of the mails, to offer to sell or to sell securities, or to carry or cause such securities to be carried through the mails or in interstate commerce for the purpose of sale or for delivery after sale.

21. No registration statement has been filed with the Commission or has been in effect with respect to the offering alleged herein.

22. By engaging in the conduct described above, each of the Defendants violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).

Second Claim for Relief

Fraud in the Offer or Sale of Securities
Violations of Section 17(a) of the Securities Act
(Against Defendants Millennium, MLLC, and Zybell)

23. The Commission realleges and incorporates by reference ¶¶ 1 through 18 above.

24. Defendants Millennium, MLLC, and Zybell, and each of them, by engaging in the conduct described above, directly or indirectly, in the offer or sale of securities by the use of means or instruments of transportation or communication in interstate commerce or by use of the mails:

a. with scienter, employed devices, schemes, or artifices to defraud;

b. obtained money or property by means of untrue statements of a material fact or by omitting to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

c. engaged in transactions, practices, or courses of business which operated or would operate as a fraud or deceit upon the purchaser.

25. By engaging in the conduct described above, each of the Defendants violated, and unless restrained and enjoined will continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).

Third Claim for Relief

Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder
(Against Defendants Millennium, MLLC, and Zybell)

26. The Commission realleges and incorporates by reference ¶¶ 1 through 18 above.

27. Defendants Millennium, MLLC, and Zybell, and each of them, by engaging in the conduct described above, directly or indirectly, in connection with the purchase or sale of a security, by the use of means or instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities exchange, with scienter:

a. employed devices, schemes, or artifices to defraud;

b. made untrue statements of a material fact or omitted to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

c. engaged in acts, practices, or courses of business which operated or would operate as a fraud or deceit upon other persons.

28. By engaging in the conduct described above, each of the Defendants violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.

Fourth Claim for Relief

Fraud by an Investment Adviser Violations
of Section 206(1) and 206(2) of the Investment Advisers Act
(Against Defendants MLLC and Zybell)

29. The Commission realleges and incorporates by reference ¶¶ 1 through 18 above.

30. Defendants MLLC and Zybell, and each of them, by engaging in the conduct described above, directly or indirectly, by use of the mails or means or instrumentalities of interstate commerce:

a. with scienter, employed devices, schemes, or artifices to defraud clients or prospective clients;

b. engaged in transactions, practices, or courses of business which operated as a fraud or deceit upon clients or prospective clients.

31. By engaging in the conduct described above, Defendants MLLC and Zybell violated, and unless restrained and enjoined will continue to violate, Sections 206(1) and 206(2) of the Investment Advisers Act, 15 U.S.C. §§ 80b-6(1) & 80b-6(2).

Fifth Claim for Relief

Unregistered Investment Company
Violations of Section 7(a) of the Investment Company Act
(Against Defendant Millennium)

32. The Commission realleges and incorporates by reference ¶¶ 1 through 18 above.

33. Defendant Millennium is an issuer who holds itself out as being engaged primarily, or propose to be engaged primarily, in the business of investing, reinvesting, or trading in securities, and is therefore an investment company pursuant to Section 3 of the Investment Company Act, 15 U.S.C. § 80a-3.

34. From at least April 2002, Defendant Millennium, either directly or indirectly, offered for sale, sold, or delivered after sale, purchased, redeemed, retired or otherwise acquired or attempted to acquire, by the use of the mails or a means or instrumentality of interstate commerce, securities or interests in a security.

35. Millennium has not registered with the Commission as an investment company.

36. By engaging in the conduct described above, Defendant Millennium violated, and unless restrained and enjoined will continue to violate, Section 7(a) of the Investment Company Act, 15 U.S.C. § 80a-7(a).

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court:

I.

Issue findings of fact and conclusions of law that the Defendants committed the alleged violations.

II.

Issue judgments, in a form consistent with Fed. R. Civ. P. 65(d), temporarily restraining and preliminarily and permanently enjoining each Defendant and his or its officers, agents, servants, employees and attorneys, and those persons in active concert or participation with any of them, who receive actual notice of the order by personal service or otherwise, and each of them, for Defendant Millennium, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 7(a) of the Investment Company Act, and for Defendants MLLC and Zybell, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act.

III.

Issue in a form consistent with Fed. R. Civ. P. 65, a temporary restraining order and a preliminary injunction freezing the assets of each of the Defendants and prohibiting each of the Defendants from destroying documents; appointing a receiver over Defendant Millennium; and ordering expedited discovery and accountings.

IV.

Order Defendants Millennium, MLLC, and Zybell to disgorge all ill-gotten gains from their illegal conduct, together with prejudgment interest thereon.

V.

Order Defendants Millennium, MLLC, and Zybell to pay civil penalties under Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), order Defendants MLLC and Zybell to pay civil penalties under Section 209(e) of the Investment Advisers Act, 15 U.S.C. § 80b-9(e)(1), and order Defendant Millennium to pay civil penalties under Section 42(e) of the Investment Company Act, 15 U.S.C. § 80a-41(e).

VI.

Retain jurisdiction of this action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that may be entered, or to entertain any suitable application or motion for additional relief within the jurisdiction of this Court.

VII.

Grant such other and further relief as this Court may determine to be just and necessary.

DATED: September 26, 2003

http://www.sec.gov/litigation/complaints/comp18362.htm