Two Lawyers Charged With Mail Fraud

By Mark Hamblett
New York Law Journal

Two brothers who are lawyers at a small personal injury firm in Manhattan have been charged with defrauding clients by switching retainer agreements on them after cases were resolved.

Mark Virag, 58, stole $350,000 from 24 different clients and misappropriated money deposited in escrow, according to a criminal information charging him with 24 counts of mail fraud filed by the Southern District U.S. Attorney's office Wednesday. His brother, Allen Virag, 56, is charged with a single count of mail fraud involving the taking of more than $16,000 from an estate.

The two men handled personal injury claims in federal and state court from the offices of their two-partner firm Virag & Virag at 225 Broadway. They waived indictment on the charges before U.S. District Judge Denise Cote Wednesday morning.

A defendant's decision to waive indictment and agree to be prosecuted by information, as opposed to being charged in a criminal complaint, traditionally means defense lawyers have reached at least a preliminary agreement on a plea deal with prosecutors.

Defense attorney Joel Cohen of Stroock & Stroock & Lavan, who represents Mark Virag, declined comment on a possible plea deal. Benjamin Brafman of Brafman Ross, who represents Allen Virag, said his client will plead guilty in the case before Cote on Oct. 3.

"Allen Virag is a wonderful, very decent individual who is also a very caring attorney," Brafman said. "For this to happen to him is a real tragedy."

According to the information, there were two types of retainer agreements that were switched by the lawyers beginning in 1998 through early 2001.

The first kind of agreement set attorneys fees at one-third of the money actually recovered by verdict or settlement. Under the second type of agreement, the lawyers would be paid on a sliding scale, receiving 50 percent of the first $1,000 recovered, 40 percent of the next $2,000, 35 percent on the next $22,000, and 25 percent on any amount recovered over $25,000.

But the size of the recovery rendered either one of the two retainer agreements more profitable than the other, the information charges. In several instances, after the size of the recovery was calculated, Mark Virag would switch the agreement to ensure a larger fee for the firm.

The information also states that the law firm would collect the proceeds from personal injury settlements or verdicts and deposit the money in escrow, where, on several occasions Mark Virag allegedly misappropriated some of those funds for his own use and never paid the clients the money they were due.

The amounts of money that clients lost on the 24 cases listed in the information ranges from a low of $1,009 to as much as $79,968.

The brothers, who are residents of North Woodmere, N.Y., could be sentenced to as much as 5 years in prison for each count in the information, but in all likelihood, they will be sentenced to far less time than the maximum, with Mark Virag likely to receive a stiffer sentence. Both men are also eligible to be ordered to pay as much as $250,000 in fines for each count.

"When injured persons have to take their cases to court, they need to know they can trust their lawyers and not be victimized again," U.S. Attorney James B. Comey said in a prepared statement. "We will seek out and punish attorneys who cheat their clients."

Date Received: September 25, 2002