By David Leask Chief Reporter From Herald Scotland

One of Scotland’s biggest law firms is being sued after the collapse of a £400m hedge fund at the centre of a major police fraud probe.

Burness Paull is facing the legal action from the liquidators of Heather Capital, the offshore financial empire run by Glasgow-born but Spanish-based tycoon Gregory King.

The firm – one of the two biggest in Scotland – is understood to have acted for at least one of the businesses in Mr King’s network of companies.

Heather Capital raised hundreds of millions in international finance to lend against Scottish property before going under in 2010. Most of its money has been lost.

Heather Capital’s liquidator, Paul Duffy of Ernst and Young on the Isle of Man, has launched a series of lawsuits against firms of lawyers and accountants which carried out work for the hedge fund and its affiliates before their collapse.

The exact nature of the actions has not been revealed but it is understood Mr Duffy is trying to secure tens of millions of pounds lost by Manx-registered Heather Capital for investors across the globe.

A spokesman for Ernst and Young said: “I can confirm that Heather has made a claim against Burness via its liquidator, but cannot provide any further comment on the ongoing case.”

The lawsuits come on top of a criminal investigation by Police Scotland in to Mr King, 46, and three associates.

One of those associates is Andrew Sobolewski, who was chief executive of Heather affiliate Mathon Ltd, which was renamed Harvest Finance before being liquidated.

Mr Sobolewski joined Mathon in 2008 from Burness, where he was a commercial property partner.

In a statement to The Herald, the 56-year-old lawyer, who lives near Bridge of Weir, said: “I have no comment to make, other than to record that I have not acted improperly or illegally.

“In so far as the action against Burness Paull is concerned, I have no knowledge of the detail of this matter at all and for the avoidance of doubt during my time as a partner at Burness, I never acted on any legal matters connected with Heather Capital or Mathon.”

Burness Paull – which was formed by the 2012 merger of Burness and Aberdeen-based Paull & Williamson – has around 400 staff and is led by chairman Philip Rodney.

Both Mr Rodney and his marketing department failed to respond to repeated requests from The Herald for comment.

Ernst and Young’s Mr Duffy has also sued Levy & McRae, another Glasgow law firm understood to have been involved in handling a Mathon transaction.

One of Levy & McRae’s former partners, Peter Watson, was a director of a Mathon Ltd for under a year and of another affiliate, Mathon Capital, for under two years. Levy & McRae, which provides legal advice to the Herald & Times Group, publishers of The Herald, made no comment. Mr Watson was not available for comment.

Mr Duffy has also sued KPMG, a rival firm of accountants and auditors, for £100m. KPMG has already said that Ernst & Young action “has no merit”.

Mr King and Mr Sobolewski and two other men are the subjects of a May 2013 report to the procurator fiscal. This report is still under consideration.

For more on this story go to: http://www.heraldscotland.com/news/home-news/law-firm-sued-over-400m-hedge-fund-probe.118802376