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Merry-Go-Round Enterprises – Devan v. Ernst and Young

Arnold Weiner was lead counsel for the case of Devan v. Ernst and Young, which settled for $185 million.  In Devan v. Ernst and Young, Deborah H. Devan, the Chapter 7 Trustee for Merry-Go-Round Enterprises, alleged the accounting firm engaged in duplicity and provided bad advice while providing turnaround accounting services.  The lawsuit accused Ernst and Young of concealing its relationship with Washington D.C. law firm Swidler & Berlin, which had recommended Ernst and Young as the turnaround adviser.  Swidler & Berlin represented the accounting firm in a West Virginia lawsuit at the time. The assertion was also made that Ernst and Young assigned junior personnel who gave incompetent advice.  At the time of the settlement, experts believed it to be the first case to assign liability to a consultant hired to manage the turnaround of a bankrupt company.  After settling that case, Ernst and Young hired Arnold Weiner and his partners to represent Ernst and Young in its suit against Swidler & Berlin.