Judge increases verdict against Morgan Stanley to $1.58 billion

WEST PALM BEACH, Fla. (AP) _ A judge added $130 million to the $1.45 billion verdict a jury awarded financier Ron Perelman in his fraud lawsuit against Morgan Stanley. <br/><br/>Circuit Court Judge Elizabeth

Friday, June 24th 2005, 12:16 pm

By: News On 6

WEST PALM BEACH, Fla. (AP) _ A judge added $130 million to the $1.45 billion verdict a jury awarded financier Ron Perelman in his fraud lawsuit against Morgan Stanley.

Circuit Court Judge Elizabeth Maass took off about $84.5 million from the verdict because of related settlements Perelman had previously received. But she added more than $208 million in interest to increase the verdict by nearly 10 percent to $1.58 billion, according to a written ruling issued Thursday.

Perelman, the billionaire chairman of Revlon Inc., won his case alleging the investment bank covered up the failing finances of Sunbeam Corp. so he would sell his Coleman camping-equipment maker to the company in 1998. A jury last month awarded him $850 million in punitive damages and $604.3 million in compensatory damages.

Morgan Stanley spokesman Andrew Walton repeated the firm's intention to appeal. The company has previously said the judgment would not interfere with the company's business.

``We believe we have multiple grounds on which to appeal and fully expect to prevail,'' Walton said in a prepared statement.

Perelman's attorney, Jack Scarola, said his side ``prevailed on every significant post trial argument that was made.'' He said a settlement was plausible, given the more than $300,000 in interest that accrues each day.

``With interest accumulating at enormous sums on a daily and yearly basis, plus the likelihood of failure for the appeal in this case, that has got to result in very strong pressures to resolve this claim,'' Scarola said.

Morgan Stanley's appeal will be based largely on a ruling Maass made before the trial that said because the firm failed to produce potential evidence in the case, jurors should assume Morgan Stanley helped Sunbeam cover up its financial problems.

Because of the ruling, Perelman had to prove at trial only that he relied on fraudulent statements made by Morgan Stanley when he decided to sell Coleman.

Sunbeam filed for bankruptcy protection in 2001 after its financial troubles were discovered, and its chairman, ``Chain Saw'' Al Dunlap, was accused of leading an accounting fraud. He agreed in 2002 to never again hold a leadership role in a public company and paid $500,000 to settle an SEC lawsuit charging him with inflating income and other improper accounting practices.

Morgan Stanley also cast itself as a victim of the Sunbeam fraud, saying it lost $300 million when the company collapsed.

In a hearing this week, Morgan Stanley's attorneys argued that the punitive and compensatory damages awarded should be cut down because Sunbeam and Arthur Andersen were also to blame.