MANHATTAN (CN) - A New York art gallery says former Enron executive Jeffrey Shankman is now in "desperate need" of money and tried to extort $150,000 by accusing the gallery of selling him a forged work of art. The gallery says Shankman, who considers himself an art expert, altered the painting himself or had it altered as part of his scheme.
Historical Design sued Shankman in New York County Court. It claims Shankman spent $3.5 million of Enron's money on fine art, and was slated to spend $20 million more, until "the Enron debacle stopped the cash from flowing."
Shankman is part owner of an art gallery in Houston, where he lives, and has been a trustee of the Contemporary Art Museum there, and served on a committee of Houston's Museum of Fine Arts.
The gallery says that on Nov. 22, 1997, Shankman personally inspected and bought the work at issue, a gouache and oil painting, "Les Visiteurs," by Jean Lambert Rucki, from Historical Design's gallery on East 61st Street. He allegedly paid $40,000 for the work - after getting a $9,800 "dealer discount."
According to the complaint, this summer "Shankman experienced serious financial difficulties and reverses and desperately needed to stem his cash flow problems," so he "maliciously formulated and carried out a fraudulent plan or scheme seeking to extort cash from the plaintiff."
The plan was to "maliciously represent to plaintiff that: (a) the painting was not by J. Lambert-Rucki (b) the painting is the same painting in the same condition as it was on Nov. 22, 1997 (c) the same painting in exactly the same condition as it was on Nov. 22, 1997 is a worthless forgery ... [and] (e) the painting is owned and was paid for by Shankman and not by Enron or its shareholders."
The gallery says Shankman did it all "to fraudulently extort immediate cash money from plaintiff in the amount of some $32,000 then more desperately raising his fraudulent extortion demand to some $150,000 in immediate cash funds."
And, Historical Design says, Shankman had the painting "altered, had addition(s) and/or change(s) so that it is not the same painting that plaintiff sold on or about Nov. 22, 1997 and that Shankman fraudulently did this or permitted it to be done by his agent(s) for the purpose of deceiving plaintiff and extorting or obtaining cash money from plaintiff."
The gallery said Shankman did this when he realized that the painting had not quadrupled or quintupled in value since he bought it for Enron, and he needed the money. It also claims Shankman refused its requests to examine the painting, but "kept increasing the size, amount, and the urgency of his demands to plaintiff for immediate cash only."
The gallery is represented by Stuart Serota with Kaufman and Serota of Rockville Center.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.