Ernst & Young Sued Over Perot Hedge Fund Collapse

Aug 27 2010 | 10:50am ET

Investors in a hedge fund managed by former presidential candidate H. Ross Perot’s family office have sued its accountants, accusing them of helping Parkcentral Capital Management defraud them.

The lawsuit alleges that Ernst & Young “facilitated, assisted in and participated in” the fund’s fraud. A lawyer for the investors said that Parkcentral’s “audited financial statements never once warned Parkcentral’s investors of their impending doom.”

Parkcentral itself was sued last year over the 2008 collapse of its $2.6 billion Global Hub hedge fund, which plaintiffs allege was controlled by the Perot Family Trust and other Perot-controlled entities. According to one lawsuit, Parkcentral misled investors about the fund’s liquidity, leverage and risk controls, leading to the complete wipe-out of the hedge fund’s value.

JPMorgan Chase has also sued Plano, Texas-based Parkcentral for defaulting on a $125 million margin call.

The plaintiffs in the latest lawsuit lost some $17 million in two Parkcentral hedge funds that collapsed.

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