After seeing their $16 million investment in a Plano, Texas-based hedge fund vaporize in less than 90 days, stunned investors turned to Houston’s Ahmad, Zavitsanos & Anaipakos for answers. 

Last week, Ahmad, Zavitsanos & Anaipakos lawyers Demetrios Anaipakos and Amir H. Alavi sued Ernst & Young for its role in the spectacular implosion of the Parkcentral Global hedge fund. The lawsuit claims that Ernst & Young falsely represented that it had fairly audited Parkcentral Global and failed in its “watchdog” role to warn relying investors of the risk of fraud and noncompliance by management, among other things.

The lawsuit focuses on two funds sold by Plano’s Parkcentral Global and was filed on behalf of Houston financial consultant Gus H. Comiskey and four Tucson, Ariz.-based entities, including the Thomas R. Brown Family Private Foundation. The now-defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate H. Ross Perot before closing its doors after the bottom fell out of the securities market and credit froze in November 2008, losing more than $2.6 billion in a matter of days.

Earlier this month, Brown Investment Management, L.P., one of the plaintiffs in this suit against Ernst & Young, won a Delaware Supreme Court ruling that requires Parkcentral Global to disclose its former investors. Those investors could be added to the new Houston lawsuit. “Our clients were told that an investment in Parkcentral was designed to preserve capital,” Mr. Anaipakos says. “Instead, they lost every penny in record time.  E&Y was supposed to be auditing Parkcentral, but the audited financial statements never once warned Parkcentral’s investors of their impending doom.”