The federal government filed a $548 million lawsuit yesterday against Ernst & Young LLP, accusing the huge accounting firm of fraud and negligence in the failure of a Chicago bank last year.

The Federal Deposit Insurance Corp., which brought the lawsuit, retained Baltimore attorney Stephen L. Snyder to be the lead attorney in the case.

Snyder, 55, has locked horns with Ernst & Young before. In 1999, he won a $185 million judgment against the accounting firm after a jury found it responsible for the ultimate failure of Merry-Go-Round Enterprises - believed to be the first case in which a turnaround consultant brought in to fix an ailing company was held liable for its demise.

The FDIC accuses the accounting firm of misstating Superior Bank's assets and deliberately delaying the reporting of the error for fear it would somehow damage the $11 billion sale of Ernst & Young's consulting arm.

The government is seeking $548 million in compensatory damages, and three times that amount in punitive damages, plus court costs.

Ernst & Young, in a statement, said: "Clearly, Superior Bank's failure was not caused by any action of ours, and we intend to vigorously defend claims against the firm."

Federal regulators seized Superior - based in the Chicago suburb of Oakbrook Terrace - in July 2001.

The S&L; was the largest insured U.S. financial institution to fail in nearly 10 years. The lawsuit said the cost of the failure to the FDIC was $750 million.

Superior had lost millions making risky, high-interest-rate home loans to borrowers with tarnished credit.

The Chicago-based Pritzker family - and equal partner Alvin Dworman, a New York developer - admitted no liability in Superior's failure, and thrift regulators imposed no sanctions on them.

Court documents said that Ernst & Young, after lengthy denials, admitted in January 2001 that Superior's assets were overvalued by $270 million. Deeper investigation slashed the value of the thrift's assets by another $150 million, according to the suit.

New York-based Ernst & Young yesterday blamed Superior's problems on the economic downturn and the institution's failure to follow through on a recapitalization plan.

Ernst & Young will have to defend itself against Snyder, a self-described "street-fighter" who has a gift for making the complex seem simple, and for making connections with juries. He prefers the action of a courtroom over the haggling across the settlement table and said he'll continue to embrace that philosophy in the Superior Bank case.

He is to be assisted by partners Andrew Slutkin, 37, and Mark Kopec, 36.

"I'm a risk-taker," Snyder said. "The government hired me as a trial lawyer, not a settlement lawyer. [Ernst & Young] is a firm I know well. They've got a long wait if they think they're going to get a phone call from me."

Stating that "I don't get paid unless I win," Snyder acknowledged that he was hired on a contingency basis. However, neither Snyder nor the FDIC would provide details of the contingency agreement.

In several of his victories, Snyder won using novel legal theories that were initially given long odds of succeeding. But dogged preparation, skillful staging and well-paced presentations have helped those novel theories succeed.

About the Merry-Go-Round case, U.S. Bankruptcy Judge Stephen Derby wrote that "the Ernst & Young litigation was imaginatively conceived, skillfully staged, thoroughly prepared, aggressively pursued, and timely and successfully resolved for the great benefit of MGRE's bankruptcy case."

In one of Snyder's more recent cases, a Baltimore jury this past March awarded one of the largest legal judgments in state history - $276 million - to Catonsville businessman Scott Steele, who had alleged that First Union National Bank had defrauded his company and used his ideas to start a $2.4 billion business of its own.

In that case, which remains on appeal, Snyder was brought into the case after it had been pending for a year, and in just a few short months reshaped the legal strategy and got the case into court.

Snyder vows that his latest - and largest - case will not lag either, stating he expects to go to trial within a year. It will be waged in federal court in Chicago, where it was filed.

"To have the U.S. government hire us is obviously an honor," he said. "Obviously, to handle a case of this magnitude is quite an honor" as well.

The Associated Press contributed to this article.