Virage Capital Money Mystery featuring Hecht Partners & Pierce Bainbridge
“When you’re doing that kind of stuff at the attorney general’s office, you really feel like you’re doing God’s work. You’re catching the bad guys. It’s really fun.” ~ Former Pierce Bainbridge, and current Hecht Partners partner, Andrew “Andy” Lorin, January 2010 in Law360 about his work in the New York Attorney General’s office under Eliot Spitzer
In the not so distant past, a company that provides capital for law firms to pursue litigation decided to back a relative unknown. Its decision — to bet massively on a fledgling firm, and then again on partners from the same firm who had started a new one — has apparently not panned out. After infusing tens of millions of dollars, the funder appears to have found itself holding a proverbial big empty money bag. The litigation financing company is Virage Capital Management, the law firms are Pierce Bainbridge Beck Price & Hecht LLP and Hecht Partners LLP. The perplexing tale appears consistent with the maxim: “some things are not what they seem and others are exactly as they appear.”
A review of a timeline elicits three fundamental questions:
How does this happen?
What went on here?
Where is the money?
Virage Capital Management
Virage, based in Houston, Texas, was founded in 2013. The company’s web page says that Virage provides “creative litigation finance solutions to established litigation lawyers and law firms” and “regularly speaks with a firm’s accountant, CPA, CFO, or others to ensure that you get what you expect.”
Three individuals who appear to run the Virage show — with titles from their LinkedIn pages — are listed below in alphabetical order:
- Burke McDavid. General Counsel. McDavid is fluent in Russian, and spent extensive time earlier in his career in Russia, while an attorney for the Akin Gump law firm, with a focus on investment related work.
- Edward Ondarza. Managing Director. Ondarza previously worked for Enron.
- Martin “Marty” Shellist. Managing Director. Founding partner of the Shellist Lazarz & Slobin law firm.
Virage Capital is apparently one of several “Virage” entities, including one with an address at Ugland House in the Cayman Islands. In addition to financially backing law firms, according to SEC filings, Virage issues/sells securities to undisclosed investors.
The Money Timeline
Pierce Bainbridge was formed under another name in January 2017. The timeline below commences in March 2019, the month when the firm’s original litigation funder, Pravati Capital LLC, declared a $9.1 million default.
March 5, 2019. Steelstone LLC appears to have been a lending business — then operated by two individuals for around six months — located in Brooklyn, New York.
Steelstone files a UCC lien naming Pierce Bainbridge as a debtor — in plain talk, this means Steelstone likely made a loan to Pierce Bainbridge. The collateral pledged to Steelstone overlaps with collateral pledged to what appears to be another lender just two days later.
March 7, 2019. A UCC filing with another entity lists Pierce Bainbridge founder John Pierce as the debtor and pledges collateral overlapping with the collateral pledged to Steelstone. (Similar UCC filings are in the names of over ten additional now ex-Pierce Bainbridge partners.)
(The name “John Pierce” may sound familiar. He is the ex-lawyer for Rudy Giuliani, who Pierce says is a “close friend,” and currently represents Kenosha shooter Kyle Rittenhouse. The remarkably embattled attorney recently publicly called for the ousters of the Director of the Federal Bureau of Investigation and Director of the Central Intelligence Agency, Christopher A. Wray (FBI) and Gina Haspel (CIA), respectively.)
March 7, 2019. Virage sells $73,800,000 in securities to 8 undisclosed investors.
March 8, 2019. The next day, Pravati declares a $9,157,072.95 Pierce Bainbridge default. (The linked to UCC filings are in the names of ex-Pierce Bainbridge partners Douglas S. Curran and Christopher N. LaVigne. Similar filings are publicly available for several additional ex-partners.)
March 28, 2019. The Steelstone debt is cleared.
April 1, 2019. The Pravati $9.1 million debt is cleared.
April 2, 2019. The next day a UCC lien is filed memorializing the commencement of the Pierce Bainbridge and Virage relationship. Law360 reports that Virage agreed to loan $28.5 million to the firm. While not identified in the UCC filing, Virage has confirmed it is the lender.
May 1, 2019. An article in Techdirt.com about a string of Pierce Bainbridge initiated cases concludes: “Despite its 100% failure rate in Fortnite lawsuits, Pierce Bainbridge is still finding plaintiffs willing to ensure its partners keep collecting paychecks. And isn’t that the greatest victory of all?”
May 22, 2019. Pierce Bainbridge issues a press release about a lawsuit filed for Russian Oligarch, Sergey Grishin. Court filings characterize this as a “$50 million” lawsuit. The case is thrown out. (An appeal is pending.)
June 6, 2019. Marc Mukasey publicly announces he’s been hired as an outside lawyer for Pierce Bainbridge. According to Yahoo: “Mukasey has deep, personal connections to Washington and within Trump’s orbit. . .[and] grew up spending holidays with Giuliani and was something of an extended family member to the former New York mayor.” (Mukasey quits representing the firm in March 2020, citing ethical concerns with continued representation.)
June 6, 2019. Harmeet Dhillon announces a co-counsel arrangement with Pierce Bainbridge. Dhillon, an attorney, was named Co-Chair of Women for Trump, and has been involved in Trump fundraising efforts. The co-counsel relationship came to an end earlier this year when the client terminated Pierce Bainbridge and Dhillon withdrew from the case.
July 25, 2019. Pierce Bainbridge files a “$50 Million” lawsuit for Tulsi Gabbard against Google. The lawsuit is eventually thrown out.
July 25, 2019. The same day, Bloomberg reports “(Rudy) Giuliani said he was forced to borrow $100,000 from President Donald Trump’s lawyer Marc Mukasey to pay his taxes after his wife tied up a joint bank account in their bitter divorce case.”
July 27, 2019. John Pierce’s ex-wife seeks an order of protection after he sends threatening text messages. A second domestic violence temporary restraining order is entered against Pierce, the first was in 2016.
August 2, 2019. Forbes reports on “explosive and detailed allegations of serious financial improprieties” against Pierce Bainbridge including that “Pierce inflated case values, engaged in self-dealing, failed to pay debts as they became due, and manipulated clients with gifts.”
September 23, 2019. Virage sells $282,878,489 in securities to 20 undisclosed investors.
October 16, 2019. Rudy Giuliani pocket-dials a reporter and says “we need some money.”
October 17, 2019. The New York Law Journal reports that six partners quit Pierce Bainbridge since August, most only lasted a few months.
November 6, 2019. Giuliani tweets that he has hired Pierce Bainbridge.
November 7, 2019. Pierce prepares a publicly filed income and expense statement which says he owed or had:
- $90,000 to Citibank (owed)
- $27,000 to his ex-wife’s mother (owed)
- $1,000,000+ in taxes (owed)
- $10,750 in his accounts
- $0 in investment income
- “Negative” fair market value of property
- $49,581 in monthly expenses
A Philadelphia lawyer suing Pierce Bainbridge, Pravati and its named-partners asserts in a public filing: “There is no apparent source of funds for the monthly expenses, which suggests [John Pierce is engaged in the] improper diversion of funds from litigation funders or from [Pierce Bainbridge].”
November 2019. Camille Varlack, ex-Pierce Bainbridge Chief Operating Officer and Special Counsel, was involved in efforts to secure limited personal guarantees from Pierce Bainbridge attorneys in connection with an over $30 million additional capital commitment from Virage.
(Varlack is now at Bradford, Edwards & Varlack with Denver G. Edwards who lied under oath to do John Pierce’s bidding; ex-firm partner Christopher N. LaVigne who is now at Withers Bergman / Withersworldwide lied under oath as well. Varlack and Edwards are joined by ex-Pierce Bainbridge partner Patrick Bradford, as well as ex-Pierce Bainbridge Chief Financial Officer Kevin Cash, who presumably eventually will have to answer for the financial mess at Pierce Bainbridge.)
November 15, 2019. Virage files a UCC lien memorializing an additional Pierce Bainbridge infusion.
A report in Law360 says: “Under the draft agreement, which several former Pierce Bainbridge attorneys said was finalized within days, Virage would refinance its initial [$28.5 million] loan to the firm, provide $20 million in new funds and extend the firm up to $14 million more in additional funds until June. At the time, Virage said Pierce Bainbridge owed roughly $30 million, counting interest on the initial loan.”
November — February 2020. John Pierce, on behalf of Pierce Bainbridge and related entities, secures around $5 million from at least four cash advance lenders — West Coast Business Capital, Slate Advance, Creative Capital Funding and Karish Kapital.
The loans were secured by repeatedly pledging the same collateral already pledged to Virage — purported future firm receivables. Each of the four known cash advance lenders eventually commence legal action.
January 14, 2020. Pierce Bainbridge then-client Michael Avenatti is arrested during a California State Bar disciplinary hearing. A CNBC article says “Avenatti’s bail [was] revoked because there is reason to believe he had violated terms of his release by engaging in “mail fraud,” “wire fraud,” and “structuring financial transactions to evade [currency] reporting requirements,” as well as “money laundering.”
Avenatti was represented at the disciplinary hearing by then-Pierce Bainbridge partner Thomas Warren. The new criminal charges concern misconduct which presumably overlapped with Avenatti’s time as a Pierce Bainbridge client.
Avenatti did not pay Pierce Bainbridge for legal services.
January 22, 2020. Pierce Bainbridge files a “$50 Million” lawsuit for Tulsi Gabbard against Hillary Clinton. Techdirt.com says the complaint, signed by then Pierce Bainbridge named-partner David L. Hecht is “laughable” and that Hecht should be “embarrassed.” Gabbard eventually drops the lawsuit.
This is at least the third “$50 Million” Pierce Bainbridge lawsuit that barely made it past go.
February 18, 2020. Pierce Bainbridge allegedly stops making payments on a cash advance from West Coast Business Capital.
February 19, 2020. The very next day, John Pierce absconds with $2.5 million from a payday type lender at a residential address in Queens, New York named Karish Kapital.
The $2.5 million was secured by pledging the same purported future firm receivables already pledged to Virage and several other entities, as well as an agreement to make daily repayments. The New York Law Journal reports Karish Kapital said as of late May no payments were made.
A $4 million money judgment was entered in Karish Kapital’s favor in July 2020.
February 19, 2020. The same day as the Karish Kapital $2.5 million agreement, a Pierce Bainbridge tied litigation fund, Talon LF, LLC, files for a foreign agent status in New York. The fund was incorporated in Delaware on September 14, 2018. Public investor solicitation materials for Talon appear to make misleading representations about the Pierce Bainbridge litigation track record.
For example, an accompanying transmittal email represents “vertically integrated with PB w/ a success rate on contingency cases of 97%.” Under any reasonable definition of “success,” this does not comport with reality.
March 20, 2020. Hecht Partners LLP is formed one month after the $2.5 million was essentially pilfered from the Queens, New York payday lender. The firm was founded by David L. Hecht, and according to a later court filing, Kathryn Lee Boyd and Max Price are co-founders. All three are ex-partners of Pierce Bainbridge Beck Price & Hecht.
Bainbridge had been in the crosshairs of the Federal Trade Commission (FTC) earlier in his career for allegedly spearheading an $80 million telemarketing scheme on the general public.
March 22, 2020. LawFuel.com reports that David L. Hecht resigned from Pierce Bainbridge. Hecht, however, subsequently signs legal filings on behalf of both Hecht Partners and Pierce Bainbridge in May, June and July.
Hecht has also changed his LinkedIn at least three times concerning his relationship with Pierce Bainbridge, subsequent to his resignation in March.
May 13, 2020. During a hearing in the Boeing 737 Max class action, Hecht, says that since July 2019: “Pierce Bainbridge has spent millions” and “[t]his is a very expensive case for Plaintiffs.” (Pierce Bainbridge was on the plaintiffs side of the case.)
The “millions” spent on the “very expensive [Boeing] case” would include capital provided by Virage.
May 13, 2020. During the same Boeing hearing, Hecht says: “just last night we secured an independent commitment of significant funds for this case tied to Mr. Lorin and my continued role in the case, subject to documentation.”
Mr. Lorin is Andrew “Andy” Lorin who also was a Pierce Bainbridge partner who became a Hecht Partners partner.
According to Law360, Lorin worked “under Eliot Spitzer, investigating . . . banks and hedge funds” and “helped[ed] prosecute civil actions against WorldCom’s Bernard Ebbers and McLeoudUSA’s Clark McLeod, telecommunications executives who were convicted of financial fraud.’”
Lorin provided the colorful quote at the outset of this article. It is even more colorful when one considers the on-goings at Pierce Bainbridge where Andy Lorin was one of the longest tenured partners.
May 13, 2020. While Hecht claimed to have resigned from Pierce Bainbridge two months earlier— and immediately removed any reference to Pierce Bainbridge from his LinkedIn — he represented during the same hearing: “Mr. Lorin and I withdrew from the [Pierce Bainbridge] partnership but we remain affiliated in connection with certain cases, including this one. We have access to all the Pierce Bainbridge systems.”
May 20, 2020. John Pierce forms “Pierce Bainbridge P.C.”
This, among several other items, overwhelmingly suggests that Virage provided the “significant funds” which Hecht stated at the hearing was “subject to documentation.” These funds would be on top of the “millions” Virage already poured into the “very expensive” Boeing 737 Max case.
June 11, 2020. Hecht Partners says it is a “successor” firm to Pierce Bainbridge in Boeing. Pierce Bainbridge had not dissolved, and to date, as far as we know, has still not done so.
(Hecht Partners has also appeared as counsel in other cases previously handled by Pierce Bainbridge, as have other Pierce Bainbridge spin-offs, including Warren Terzian, Bradford Edwards & Varlack, Bainbridge Law APC and the Law Offices of Jonathan A. Sorkowitz.)
July 29, 2020. Hecht publicly announces that Susman Godfrey LLP — “one of the premiere plaintiffs class action counsel in the United States” — will co-counsel with Hecht Partners in the Boeing case.
It is reasonable to suspect that Virage played a role in establishing this relationship. Susman Godfrey has provided counsel to Virage and Susman associate highlights praise from Virage’s Edward Ondarza on the attorney’s firm biography.
August 31, 2020. Regulatory Compliance Watch reports that another lawyer Virage funded — Tim Howard of Tallahassee, Florida — is apparently the subject of a probe by the Federal Bureau of Investigation (FBI.) Virage reportedly provided “Howard upwards of $16 million for his brain-injury lawsuit against the NFL.”
September 17, 2020. Virage sells $380,498,149 worth of securities to 30 undisclosed investors.
September 29, 2020. Law360 reports that Howard — the previously mentioned Virage funded Tallahassee lawyer — settled fraud charges brought by the Securities & Exchange Commission (SEC), and “agreed to pay a final civil penalty of $385,536 ‘without admitting or denying the allegations.’” As a condition of the settlement, among other items, Howard was “suspended from appearing or practicing before the Commission as an attorney.”
September 29, 2020. Just three months after Hecht’s announcement, Susman filed to quit the Boeing case. Hecht’s public tweet and an excerpt from the Susman withdrawal motion are below.
October 30, 2020. The Southeast Texas Record, reports that Hecht Partners is out of the Boeing 737 Max case as well.
Subsequently filed transcripts show three ex-clients of Hecht Partners in the Boeing 737 Max case testified under oath that David L. Hecht deceived them into signing up with his firm.
In one instance, Hecht apparently pretended to be a partner at another law firm — in reality, Hecht had not affiliation with that firm.
Excerpts of the ex-client depositions are remarkable; three separate individual ex-clients testifying that David L. Hecht deceived them into signing paperwork with Hecht Partners.
A filing by the law firm, where Hecht apparently deceptively suggested he was a partner, represents that Hecht’s misbehavior induced the ex-Hecht Partners clients to hire Susman Godfrey as well.
“Some things are not what they seem and others are exactly as they appear.”
Virage Capital provided tens of millions to Pierce Bainbridge and then “significant” funding to spin-off Hecht Partners.
The capital was to pursue litigation; not a single trial victory has come to pass.
The mass Pierce Bainbridge attorney exodus had already commenced prior to Virage Capital’s over $30 million additional capital commitment in November 2019. The firm dwindled from around 70 attorneys in September 2019 to just a handful by April 2020, yet the tens of millions had apparently mostly dried up.
Rudy Giuliani hired Pierce Bainbridge around a week before the multi-million November infusion, made just weeks after Giuliani talked of “needing some money.”
There is also a seeming nexus to President Trump, with Pierce Bainbridge having had ties to the likes of Rudy Giuliani, Mark Mukasey (who eventually quit representing the firm), Harmeet Dhillon, Carter Page, as well as ex-client George Papadopoulos. This notion is bolstered by John Pierce’s current involvement in the Kyle Rittenhouse matter.
The Boeing 737 Max class action looks like a particularly unfortunate series of events for Virage. Millions were provided to Pierce Bainbridge; the firm is no longer on the case. Susman Godfrey was perhaps brought in by Virage to help Hecht Partners; Susman Godfrey is no longer on the case. Virage, per David Hecht’s words, appears to have provided additional “significant” funding to Hecht Partners — on top of the reported $65 million debt racked up by Pierce Bainbridge — and now Hecht Partners is no longer on the case.
Furthermore, the most recent proverbial horse apparently backed by Virage — on the heels of the $65 million debacle — Hecht Partners founder David L. Hecht, was, according to sworn testimony, busy pretending to be a partner at another law firm and deceiving now three ex-clients into signing paperwork with Hecht’s firm.
Perhaps this behavior can be tied to the tens of millions of dollars reportedly owed to Virage, perhaps not. It is unknown whether Hecht — or any of his co-ex-Pierce Bainbridge partners at Hecht Partners — executed a personal guarantee in connection with the multi-million November infusion to Pierce Bainbridge; presumably Camille Varlack would know for certain.
Virage has infused millions, in stages, into lawyers who have produced little in the way of positive results, a circumstance which perhaps may be viewed through the lens of: “some things are not what they seem and others are exactly as they appear.”
Ultimately, as previously noted, three fundamental questions persist:
How does this happen?
What went on here?
Where is the money?
And, perhaps another appropriate observation is “what’s done in darkness always comes to light.”
Presumably, as the light intensifies more questions eventually will give way to honest answers, and the Money Mystery involving Virage Capital, Hecht Partners and Pierce Bainbridge will be solved.