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Clearly, these are not the best of times for Mark Belnick, who ranked among the country’s elite litigators before his stint as general counsel of Tyco International Ltd. ended in criminal and civil charges. Now, Belnick and his former law firm, Paul, Weiss, Rifkind, Wharton & Garrison, are being blamed for the demise of another company, Boston Chicken Inc. The company filed for Chapter 11 in Phoenix in 1998 and was liquidated in 2000, when McDonald’s Corp. purchased the chain and renamed it Boston Market. But the Boston Chicken legacy lives on for the company’s former professional advisers. In October, Gerald Smith, the trustee of the Boston Chicken bankruptcy, filed suit against Paul Weiss, alleging that the law firm had helped Boston Chicken hide losses from its balance sheet. Belnick has not been personally sued, but the Boston Chicken controversy, with echoes of Enron, WorldCom and, yes, Tyco, threatens to cloud the lawyer’s reputation further. Smith’s complaint against Paul Weiss dates back to 1996, when Boston Chicken hired the firm to defend it against a Securities and Exchange Commission investigation, dubbed Project X. According to the complaint, the SEC launched Project X after receiving an anonymous letter that questioned whether Boston Chicken had properly accounted for operating losses sustained by its franchisees. In 1994 and 1995, the franchisees lost a total of nearly $200 million, which, Smith alleges, should have been reflected in Boston Chicken’s SEC filings. The SEC never filed a complaint against Boston Chicken, but the company went under in 1998. The bankruptcy cost investors well north of $1 billion, says Smith’s attorney, Leo Beus, a partner in Phoenix’s Beus Gilbert. Smith’s complaint puts Belnick and his firm at the center of the meltdown. In 1996 Belnick met regularly with SEC investigators and furnished many documents to the agency; all of those encounters are chronicled in Smith’s complaint. Beus says that Belnick was the lead lawyer on Paul Weiss’s Project X team. That team, according to Smith’s complaint, continuously misled the SEC about Boston Chicken’s precarious financial condition. Smith charges Paul Weiss with negligent misrepresentation and with aiding and abetting criminal racketeering. The law firm is not the only one getting blamed. Smith has sued other professional firms, including Arthur Andersen LLP; Chicago’s Bell, Boyd & Lloyd; and other securities and accounting firms, claiming that they, too, helped Boston Chicken maintain a facade of corporate solvency. In a prepared statement, Andersen said that the trustee’s suit “represents nothing more than an unfounded attempt by Boston Chicken’s creditors to recoup losses from a business that went into bankruptcy.” John McCarthy, Bell Boyd’s chairman, echoes the sentiment. “The trustee is looking for any potential defendants. They are casting their net as wide as they possibly can. We fulfilled our professional obligations and acted in a professional manner.” Paul Weiss, likewise, denies wrongdoing. “We acted properly in connection with the [Boston Chicken] matter,” says Alfred Youngwood, the firm’s managing partner. Adds Belnick: “This suit is utterly without merit. Paul Weiss represented that client as it represents all clients: faithfully, effectively, and consistently with the highest ethical and professional standards.” Washington, D.C.’s Williams & Connolly and its star attorney, Brendan Sullivan, have been hired to defend Paul Weiss. At press time the firm had not filed an answer or motion to dismiss Smith’s complaint. The Tyco matter, in which Belnick has been sued and faces felony charges, certainly constitutes a larger threat, to be sure. So at this point, what’s a few more headlines and depositions?

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