Monday, October 13, 2008


Bloomberg reports that a former Enron exec is being sued by a New York gallery "for allegedly trying to extort more than $150,000 by claiming a painting he bought was a forgery. Historical Design, Inc., an art gallery on East 61st Street in Manhattan, said Shankman purchased three works of art in November 1997 for $40,000. The gallery said Shankman complained this year that one of them ... was a fake. He threatened to 'go public' unless he was paid least $150,000, the gallery said in court papers."

The case actually raises some interesting issues involving the law on extortion. As lawprof Jim Lindgren points out, "someone with an underlying legal claim may threaten to expose it to reach a reasonable settlement. Yet if the amount sought is so substantially out of line with the injury and the threat to embarrass is a big part of the threat, then a criminal charge of extortion can be established." He mentions the case of Autumn Jackson, "who may have been [Bill] Cosby's [out-of-wedlock] daughter, [and who] threatened exposure unless he paid her $40 million. Despite having some possible claim for support as a child, she was convicted because of the excessiveness of her claims and the threats of exposure."

So one issue in the case will be: where did Shankman get his $150,000 figure? Is that out of line with his (claimed) injury? Or is it a good faith estimate of his damages, with the threat to expose the gallery merely a secondary issue?