Art Institute sues Dallas firms No accounting for $43 million in investments

The Art Institute of Chicago on Monday sued 12 investment firms,saying they have refused to account for $43 million of the museum'smoney--6 percent of its endowment--leaving officials uncertain of thevalue of the investments.

The suit says that defendants admitted that at least one of twoDallas-based funds in which the Art Institute invested had sufferedlosses of at least 90 percent, but museum officials could not sayhow much had been lost.

"This is exactly what we're trying to find out. The lawsuit istrying to get access to the books," said Edward W. Horner Jr., theinstitute's executive vice president.

"We believe they did not invest the funds as they have promised,"he said.

The suit asks for a restraining order to "prevent the waste ofmillions of dollars."

"We want information," Horner said.

The suit names a dozen related financial limited partnerships,most with Dallas addresses, and three individuals: Conrad Seghers,James Dickey and Samer M. El Bizri (a k a Sam Bizri).

The Art Institute invested in Integral Hedging L.P. and IntegralArbitrage L.P.

Horner said that about a month ago, the institution's investmentadvisers received a communication from the funds "indicating that oneof our investments in one of the two funds might be in jeopardy."

"At that point in time, we began to ask for much more information,and they consistently refused to provide information on the status ofthese assets," Horner said.

"We think that's pretty outrageous," he said, adding this is thefirst time the Art Institute has had such a problem.

In late 1999 and early 2000, the suit said, Kennedy CapitalAdvisors Inc., the museum's investment consultant, began to getinformation on the two funds, which appear to be ultimatelycontrolled by Seghers and Bizri.

The suit says the defendants' touted their own "so-calledscientific method" and claimed the Art Institute "could not lose anyof their investment, even in a declining market," unless the stocksinvolved fell more than 30 percent.

The Art Institute first invested $23 million and then anadditional $20 million, the suit said.

As the museum was beginning to raise concerns, the FBI contactedofficials, seeking "general information about our investment" withIntegral Hedging and Integral Arbitrage, Horner said.

An offering from the companies characterized "that the funds wouldbe invested in a low-risk fashion, and we believe that they did notdo that," Horner said.

The suit was filed Monday in Dallas County District Court,according to the institute.

The defendants could not be reached for comment Monday. Aspokesman for the FBI also refused to comment on the suit.

Horner emphasized that the Art Institute is "financially sound."He said auditors were at work to provide assurances that the rest ofthe institution's money is "properly and faithfully invested."

Since 1997, the museum's five-year investment return is more than10 percent, he said.

The board of trustees and finance committee of the Art Institutehave begun a review of all financial matters to make sure thefinances are sound, said James N. Wood, president.