New Virage Capital Filing Says Pierce Bainbridge Owes $59,000,000
The filing seeks confirmation that Virage be repaid before loan brokers who helped Pierce Bainbridge secure tens of millions in capital from the funder.
Virage Capital Management, a Houston based litigation funder, filed court papers last week to confirm a priority interest over two loan brokers that helped Pierce Bainbridge Beck Price & Hecht LLP secure tens of millions in capital from the funder. The loan brokers were granted $3.5 million in arbitration late last year and recently petitioned the New York State Supreme Court to confirm the award; Virage has moved to intervene in that action.
Virage says that the brokers must wait in line to get paid; that Virage’s interest is “first priority.” Stated differently, that Virage must get paid the “no less than $59,000,000” the new filing says the funder is owed by Pierce Bainbridge, before the brokers can see a dime.
Several cash advance lenders say Pierce Bainbridge owes them substantial sums as well; a Queens, New York based payday type lender has already secured a $4 million money judgment against the firm and related entities. Virage has also said those lenders must wait in line.
The circumstances here, however, are different.
These are not lenders who provided capital to Pierce Bainbridge after Virage, nor did Pierce Bainbridge pledge to the loan brokers collateral already pledged to the Houston based funder. These are service providers whose interests derive from agreed upon commissions, that presumably, should have been paid contemporaneously with the Virage funding.
The situations are Apples to Bowling Balls.
Virage’s position and additional details are included in the filing.
Notwithstanding the massive backing from Virage, Pierce Bainbridge tanked as a law firm. Spin-off firms were formed: Hecht Partners LLP, Bradford Edwards & Varlack LLP, Warren Terzian LLP and Bainbridge Law APC. The firm’s General Counsel, Carolynn K. Beck moved on to Goldstein & McClintock LLP.
While named partner David L. Hecht said he resigned from Pierce Bainbridge in March 2020, recent court filings reveal that in July, August, September, October, and November 2020, Hecht and Pierce Bainbridge founder John M. Pierce were on work-related emails together. It appears that perhaps for Hecht and Pierce “breaking up has been hard to do.”
Reports in April 2020 said, according to Pierce Bainbridge insiders, Virage was owed an estimated $65,000,000. The overall situation is a “Money Mystery,” with Virage also going back to the well and funding spin-off firm Hecht Partners.
One wonders which, if any ex-Pierce Bainbridge partners, may have signed limited personal guarantees that Virage sought from Pierce Bainbridge attorneys prior to executing a restated funding agreement in November 2019.
Whatever the case may be, $59,000,000 still outstanding is more than a healthy chunk of change.
Virage Capital going so heavy is interesting for several reasons, including that the prior Pierce Bainbridge funder, Pravati Capital, declared a $9.1 million default. Pravati had funded Pierce Bainbridge’s first two years of operations.
Let’s take a look at issues with the firm and firm boss John Pierce, certain of which, perhaps, for some, would have resulted in pause before parting with tens of millions.
- Pierce lost his job at K&L Gates after physically assaulting a co-worker (2016)
- Pierce did a stint in a UCLA psychiatric facility and allegedly expressed an intense desire to kill the mother of his three children. (2016)
- Pierce’s firm is accused of not paying vendors going as far back as 2018, which is before the first of the Virage tens of millions started flowing in. (2018–2020)
- Pierce was on the receiving end of a second domestic violence restraining order. On July 25, 2020, Pierce Bainbridge filed a loser lawsuit for Tulsi Gabbard. On July 27, 2020, John Pierce sends over 60 texts to his ex-wife which led to the restraining order. A sample below appears to show Pierce invoked his client “Tulsi’s” name in levying a threat to the mother of his children.
- Pierce has a history of abusing drugs and alcohol including cocaine.
- Pierce’s personal financial situation according to an income statement he prepared in November 2019 was abysmal. Pierce owed (1) over $1M in taxes, (2) $90,000 to Citibank and (3) $27,000 to his ex-wife’s mother and more. A court filing sums it up well. (2019)
- Pierce Bainbridge has been sued by five vendors of legal services and four cash advance lenders.
- Pierce recently suggested that the lawyers who worked for him were not good attorneys. It begs the question of if Pierce Bainbridge, based on Pierce’s own words, was a “Seal Team of Hacks?”
- Pierce Bainbridge had highly unusual financial activity in February 2020.
- The unusual February activity included Pierce essentially pilfering $2.5 million from a pay day type lender located at a residential address in Flushing, Queens, New York. Interestingly, just one month later Hecht Partners and Bainbridge Law APC were formed by David Hecht and Jim Bainbridge of Pierce Bainbridge Beck Price & Hecht, the latter firm with a debt in the tens of millions.
- The civil litigation specialized firm won one trial in 3+ years with a net verdict of $500,000; yet, had three convicted felon clients, with one being recently pardoned.
- Ex-name partner David L. Hecht has had issues raised about his ethics and honesty by several sources.
- Ex-partner Denver G. Edwards (Bradford Edwards & Varlack) lied under oath.
- Ex-partner Christopher N. LaVigne (Withers Bergman) lied under oath.
- Ex-partner Carolynn K. Beck (Goldstein & McClintock) is accused of suborning perjury and spearheading a fraud on the court, primarily based on the sworn affidavit of an ex-firm associate; a motion is pending.
There is more, however, the big new news is that Virage Capital says Pierce Bainbridge owes the funder “no less than $59,000,000” as of last week. And Virage is looking to confirm that it would be paid before the brokers who say they helped Pierce Bainbridge secure the Virage funds are paid their outstanding commissions.
It will be interesting to see how this particular beef shakes out.