Revlon chairman Ron Perelman won a second victory against investment banking firm Morgan Stanley in a lawsuit that has given new meaning to the term "paper trail" after a Florida jury awarded Perelman $850 million in punitive damages Wednesday.

The verdict brings Perelman's total jury award to approximately $1.45 billion.

On Monday, the same nine-member jury awarded Perelman $604.3 million as compensation for his loss in the sale of camping-equipment maker Coleman to Sunbeam for $1.5 billion, which included Sunbeam stock worth between $450 million and $680 million.

Florida law allows juries to award punitive damages up to three times the amount of compensatory damages. Perelman's attorneys requested between $1.2 billion and $1.8 billion be awarded in the second phase of the trial.

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Throughout the six-week trial, which included endless financial reports and such esoteric terms as "channel stuffing" and "cookie-jar reserves," Perelman's attorneys maintained that Morgan Stanley knew of accounting irregularities at Sunbeam but chose to conceal them because of the $33 million in fees it stood to earn once Sunbeam successfully purchased Coleman. 

The lawsuit resulted from a botched business deal in March 1998 when Perelman's holding company sold Coleman to Sunbeam. Shortly after the transaction was complete, an accounting scandal erupted at Sunbeam and the value of Perelman's shares sank. Sunbeam filed for bankruptcy protection in 2001.  

Morgan Stanley claimed Perelman ignored "red flags" and the caveats of his top advisors, who warned against the deal, before selling Coleman.

Perelman pushed the sale through, according to Morgan Stanley, because the financier expected Sunbeam's stock price to soar once celebrity CEO Al Dunlap combined the two companies — not because Perelman believed Sunbeam was a sound manufacturer with realistic goals.

'Harsh and vengeful'

In his closing arguments Wednesday, Morgan Stanley attorney Mark Hansen attempted to contrast the seriousness of the firm's wrongdoing by stating what the firm did not do when it acted as Sunbeam's investment advisor.

"There is no evidence of anybody harmed, of dangerous drugs causing injury to other people, dismemberment," Hansen said. "Was it so bad, so reprehensible, that you want to harm Morgan Stanley ... that you want to damage them?"

The dramatic language, however, was not enough to convince the jury that Morgan Stanley was deserving of the "mercy" Hansen requested.

"You have awarded full compensation to Mr. Perelman," Hansen said. "I ask that your last act as jurors be measured and merciful and not harsh and vengeful."

In his rebuttal, Perelman's attorney, John Scarola gave the jury a simple reason to deny Hansen's plea.

"What you have heard is a plea for mercy," Scarola said. "What I ask you is what evidence is there, not argument, but evidence to suggest that Morgan Stanley is deserving of mercy?"

Morgan Stanley began the trial with a severe handicap after Judge Elizabeth Maass issued a default judgment designed to penalize the firm for concealing evidence.

Morgan Stanley claimed it did not have e-mail records for the period in which the sale was negotiated, then later said it had the records but it would cost hundreds of thousands of dollars and several months to locate them. This assertion turned out to be false, and Judge Maass hobbled the investment banking firm for the misstatements.

In March, Judge Maass ruled the jury must accept as fact that Morgan Stanley aided Sunbeam in defrauding Perelman.

The controversial ruling handed Perelman's team a nearly unbeatable advantage that dramatically lowered the burden of proof. Perelman's attorneys only needed to prove the financier relied on information Morgan Stanley provided to win.

Early in the trial, Morgan Stanley announced its plan to appeal and said after the first verdict that it was "not surprising given the unprecedented and highly prejudicial rulings" imposed by the judge. 

During the trial, Morgan Stanley upped its reserve fund for the case to $360 million. Though the $360 million is substantial, it seems even more sizeable when considered against the $20 million that, according to the Wall Street Journal, Perelman was willing to accept as settlement before going to trial.

Video excerpts of both verdicts are available at Court TV Extra.