The $65,000,000 Question? Virage Capital, Pierce Bainbridge & Rudy Giuliani
A company named Virage Capital Management financed Pierce Bainbridge Beck Price & Hecht LLP. After just one year, Virage was reportedly an estimated $65 million in the hole. How does this happen?
Pierce Bainbridge made a lot of noise, but the litigation firm won zero trials during the year. A criminal lawyer has asked if John Pierce is involved with a “Ponzi Scheme?”
Who is Virage Capital?
Virage is a litigation funding company based in Houston. Martin Shellist (a partner at Shellist Lazarz & Slobin LLP), Burke McDavid (former attorney at Akin Gump LLP) and Ed Ondarza (formerly of Enron) appear to run the show. Virage reportedly committed $28.5 million to Pierce Bainbridge in April 2019.
Rudy Giuliani “Needs Some Money.”
In mid-October 2019, Rudy Giuliani “needed some money.” On November 6, Rudy said he hired Pierce Bainbridge. Around a week later, Virage appears to have committed multi-millions more to the firm.
What happened before Virage’s multi-million double-down in November 2019?
- $9.1 million declared default. In March, Pravati Capital, declared a $9.1 million default after funding Pierce Bainbridge for the firm’s first two years. (Virage made its first commitment in April. Reports say Virage funds were used to wipe out some or all of the Pravati debt.)
- “Criminal Activity?” In May, Pierce Bainbridge said some public allegations against the firm “if true, would amount to criminal activity.”
- Alcohol, Drugs, Domestic Violence. In July 2019, John Pierce’s ex-wife said he has “a history of abusing “alcohol” and “cocaine.” She obtained a second domestic violence restraining order him; the first was in 2016.
- Good, Evil & God. According to Pierce, it was a battle of Good -v- Evil. A sample of Pierce’s texts to his ex are below, the “Tulsi” appears to be a reference to “Tulsi Gabbard,” a Pierce Bainbridge client. Was Virage Capital aware of Pierce’s temperament?
- Widespread Reporting. By August, Forbes, New York Law Journal, Law360 and LawFuel had reported on the allegations that “if true, would amount to criminal activity.”
- Partners Quitting. In October, six partners quit, most after just a few months. Deborah Renner was one, she had previously worked closely with Irving Picard on the Bernie Madoff fraud.
- Massive Tax Liens. A financial document from early November shows Pierce had over $1 million in tax liens, owed Citibank $90,000, owed his ex-wife’s mother $27,000 and was personally broke.
Hecht Partners & Virage Capital
All of the partners at Hecht Partners, formed in March, were partners at Pierce Bainbridge. David L. Hecht’s statements during a May hearing, a short-lived co-counsel arrangement with Susman Godfrey LLP who happens to be counsel for Virage, and a UCC filing, strongly suggest a Virage relationship with Hecht Partners.
The Hecht Partners UCC filing is dated May 21.
The day before?
On May 20, John Pierce formed “Pierce Bainbridge, P.C.”
An April 2020 report said Virage was chasing ex-Pierce Bainbridge partners at their new firms related to the massive debt. Virage has sued law firms before, there is no indication the funder has sued Pierce Bainbridge.
$65 million in one year. Seemingly nothing to show for it. Rudy needed some money. The red flags were strong.
How did this happen?
Where does this end up?