Hedge Fund Manager Sued For Alleged Extortion

Date: Friday, October 10, 2008
Author: FINalternatives

A New York City art gallery has accused a hedge fund manager and former Enron Corp. executive of trying to extort more than $150,000 by claiming a painting the collapsed energy company bought was a forgery.

The work in question is a painting called “Les Visiteurs” by the early 20th century French artist Jean Lambert-Rucki. According to Historical Design’s lawsuit against Jeff Shankman, Shankman purchased the painting on Enron’s behalf in 1997 for $40,000. The gallery says it didn’t hear from Shankman, the co-founder of Houston-based energy hedge fund Trident Asset Management and former Enron global markets chief operating officer, again until this year, when he demanded at least $150,000, threatening to “go public” if he wasn’t paid.

“Shankman, a former high-echelon Enron executive and art dealer, maliciously formulated and carried out a fraudulent plan or scheme seeking to extort cash from the plaintiff,” Historical Design alleges in its lawsuit. The gallery also accuses the hedge fund manager of effectively stealing the painting from Enron. He “wrongfully took possession of it for his own use and benefit,” the lawsuit says.

Historical Design is seeking at least $400,000 in damages and other fees.