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REBUTTAL OF FORBES™ ARTICLE: SEC vs. Millenium Capital Hedge Fund L.P., Andreas F. Zybell

The purpose of this website is to provide the follow-up regarding the case of SEC vs. Millenium Capital Hedge Fund L.P., Millenium Capital Group LLC; and Andreas F. Zybell and the Article, “Small Time Crooks” which appears on

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REBUTTAL OF FORBES ARTICLE: SEC vs. Millenium Capital Hedge Fund L.P., Andreas F. Zybell

Why Forbes Got Its Facts Wrong!

An Open Letter from Gorm Klungervik. Investor in Millennium Capital Hedge Fund and continuing investor with Andreas F. Zybell...


In these times of instant messaging, twittering and an unprecedented urgency to get the story out before anyone else, it is often difficult to discern what on the internet is accurate and complete and what is not. In the case of the 2003 Forbes article relating to Andreas F. Zybell, it is the omissions of material fact more than the sophomoric reference to "crook", that damage the credibility of the Forbes writer and renders the article little more than meaningless nonsense.

As an investor who continues to entrust my wealth to the judgment and management of Andreas F. Zybell and who has great respect for his integrity, honesty and intelligence, I feel compelled to share the facts that Forbes chose not to disclose.

First and foremost, it is important to understand that not a single investor in the hedge fund managed by Andreas F. Zybell ever complained to any regulatory agency concerning the performance of the fund and/or the conduct of Andreas F. Zybell. In fact, shortly after the Government decided to take regulatory action against our hedge fund and Andreas F. Zybell, we, as investors, retained separate legal counsel and did file what is commonly known as an "amicus curiae" brief. An "amicus curiae" brief (literally, "friend of the court") is a legal writing or document that is filed by an interested non-party to the litigation expressing their position, in terms of facts and law, on the issues of the lawsuit. A copy of the investors' brief is available for you to review on this site. I would point out that the filing of an "amicus curiae" brief by investors in favor of their money manager and against the Government is highly unusual, but in this instance we, as investors, felt compelled to share with the Court, what we believed to be a clearly misguided effort on the part of the Government. A review of the investors' "amicus curiae" brief reveals that the Forbes article fails to state the following facts:

1. The fund was profitable (the Government admitted as much in its complaint) and an outside independent CPA in his "Accountant's Review Report" concluded "the performance record of the Partnership was calculated in accordance with the Partnership accounting methodology described above, which was fully disclosed in the Partnership's Private Placement Memorandum";

2. "The investors did not complain about the Defendants' conduct, nor ask the SEC to take action on their behalf";

3. "The investors have not felt misled or hurt by the Defendants, as stated in their Declarations";

4. The investors stated in their brief, "the investors find it inconceivable that earning nothing on their capital and subjecting their capital to the risks and whims of the market while unmanaged for a period of ten months, as opposed to earning at least the 14% return that the SEC admits in their complaint was earned by the Defendants, is advancing the interests of the investors";

5. The investors also stated in their brief, "the investors respectfully submit that the rate of return as stated by the Defendants was understood, and it is the SEC's allegation that the Fund earned 14% rather than 46% that is problematic";

6. One hundred percent (100%) of the investors signed Declarations/Affidavits in which each of them made the following statement: "I do not believe that I have been misled and/or the victim of any fraud. Therefore, I do not support either a civil penalty or any disgorgement against any of the Defendants by the Court"


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At the end of the day, the Government's regulatory civil action against the hedge fund and Andreas F. Zybell came down primarily to a dispute over the timing of the recognition of cash received by the hedge fund from the sale of call option contracts. Andreas F. Zybell's position, which was fully disclosed to us as investors, was that cash received was fully earned and became profit when received, since legal title to the cash passed to the hedge fund when received, and there was no event or contingency that could force the return of this cash previously received. Similarly, any cash spent to buy back previously sold options was treated as an expense. In essence, the accounting for options was on a cash rather than accrual basis.

The case brought by the Government naming the hedge fund and Andreas F. Zybell as defendants was ultimately settled. Andreas F. Zybell was not required to make any admissions, nor was he allowed to make any denials¹; and he was permitted to continue investing client funds. Eventually, the investors' funds were returned to us. At that point, many if not most of the investors, simply handed their money back to Andreas F. Zybell since he was permitted to continue in the investment business as a money manager. While I cannot speak for others, Andreas F. Zybell has nearly doubled the average equity value of my account during 4 1/2 years beginning in November of 2005, net of fees. And these last 4 plus years have included the worst bear market since the Great Depression. His talent with respect to money management is, in my opinion, quite obvious. In addition, throughout my several year relationship with Andreas F. Zybell, he has represented me as an attorney on other matters. In a nutshell, I have found him to be consistently ethical, forthright and a careful steward of both my money and my best interests.

So why didn't Forbes disclose these facts? Only Forbes can answer that question. But the cynic in me suggests that it was probably because it was simply too inconvenient! Maybe, just maybe, the urgency to get the story out precluded a thorough and honest review of the court records. In addition, often times the allegations are far more salacious than the truth. Take the ongoing case of Mark Cuban, billionaire founder of Microsolutions and owner of the Dallas Mavericks.

The Government's complaint against Mark Cuban painted him as an evil billionaire insider-trader whose ill-gotten gains must be disgorged. The result? A federal judge dismissed the Government's case for insider trading! Mark Cuban has since responded with a motion seeking sanctions against the Government in the form of reimbursement of defense fees and expenses incurred. The allegations of Mark Cuban speak for themselves.


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Finally, Forbes would be well served to consider in advance the fact that occasionally the Government is caught engaging in seriously wrongful conduct. In the recent case of United States vs. William J. Ruehle, the Honorable Cormac J. Carney stated in his opinion; "Based on the complete record now before me, I find that the Government has intimidated and improperly influenced the three witnesses critical to Mr. Ruehle's defense. The cumulative effect of that misconduct has distorted the truth-finding process and compromised the integrity of the trial."


 See Federal Judge Carney's opinion

Maybe Forbes should consider the statement made by Louis Nizer, the famous American trial lawyer, "when a man points a finger at someone else, he should remember that four of his fingers are pointing at himself."

Should anyone wish to contact me regarding the statements made by me they can do so by emailing me at

Gorm Klungervik, Investor in Millennium Capital Hedge Fund and continuing investor with Andreas F. Zybell

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¹ A standard requirement in SEC civil settlements is that the settlement agreement contain language that the defendants neither admit nor deny the allegations. Indeed, Mary Shapiro, director of the SEC stated, "If we take away this tool [of "neither admit nor deny"], companies would have little reason to settle, and many more cases would end up in litigation".

Client Testimonials

"Mr. Zybell has represented me before state securities bureaus and in audits before the Internal Revenue Service. He always maintained the highest moral and ethical qualities in my personal and financial matters. In every instance Mr. Zybell fulfilled his responsibilities on my behalf with concern, dedication and enthusiasm. In fact, I count him as one of a handful of geniuses that I have known." - Past Client

"I want you to know how much I appreciate all you've done for me in the past, legal work, as well as all the good advice. You won't tell me what I want to hear, but you virtually always level with me as to your true opinion. Having good counsel, who has wisdom and really cares is a great blessing in life. I have much appreciated you in this regard." - Past Client

"Building The American Dream", author, entrepreneur and founder of GRK Productions, Inc. Gary Knapp had this to say, "I got in touch with an attorney, Mr. Zybell, downstate who specialized in forming limited partnerships. He carefully explained to me how to go about setting such a partnership up; this was his expertise." - Gary Knapp