A group of investors Wednesday sued the accounting giant Ernst & Young for allegedly misrepresenting the financial status of the defunct hedge fund Parkcentral Global after they lost a total of $17 million in the fund.

The lawsuit was filed in the Harris County District Court on Thursday on behalf of Houston financial consultant Gus Comiskey and four Tucson, Ariz-based entities including the Thomas R. Brown Family Private Foundation. The investors are suing Ernst & Young for alleged accounting fraud, negligent misrepresentation, securities fraud and conspiracy to commit fraud.

The now defunct Parkcentral Global was operated by affiliates of billionaire and former presidential candidate Ross Perot before closing its doors in August 2008. Ernst & Young audited Parkcentral in 2006 and 2007 but did not provide any audited reports for 2008. Those reports were completed by McGladrey and Pullen and were not delivered to Parkcentral’s investors until early 2010, instead of early 2009.

“Our clients were informed that their investment in Parkcentral was supposed to preserve capital but instead they lost every penny in record time,” says attorney Demetrios Anaipakos with the Houston law firm of Ahmad, Zavitsanos & Anaipakos. The audited statements of E&Y never warned Parkcentral’s investors of the declining financial situation.”

Of the total of $17 million lost by the five investors, $16 million was lost by the investments of the Brown Foundation, Brown Investment Management, and two-other family-related ventures within 90 days of the time they invested. The offering materials for Parkcentral Global’s two funds said that investors could only lose 5 percent of the net asset value of the fund in a “worse case scenario.” Instead, ParkCentral invested in asset-backed securities whose value plummeted quickly in 2008.

As reported by Securities Technology Monitor earlier on Thursday, Brown Investment Management, one of the plaintiffs in the suit against Ernst & Young, recently won a ruling from Delaware’s Supreme Court that requires Parkcentral Global to disclose the names of other former investors.

Anaipakos says that Brown Investment has received the list of investors and intends to use it to investigate the claims and seek other investors to join in on its lawsuit against Ernst & Young. Brown Investment wants to know whether Parkcentral’s management notified any investors of its failing finances prior to shutting down, he says.