South Jersey lawyer Michael W. Kwasnik has been indicted for stealing more than $1 million from an elderly woman from Cherry Hill, N.J., who hired him to plan her estate.
Kwasnik was indicted on Nov. 4 on a range of criminal charges including theft by unlawful taking and money laundering. A warrant was issued for his arrest with bail set at $1 million.
The indictment was sealed until Nov. 7 when it was announced by New Jersey Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor at a press conference.
Kwasnik, 42, resides in Philadelphia. At the time the alleged criminal acts took place, he was the managing partner of Kwasnik Rodio Kanowitz & Buckley, a firm with offices in Cherry Hill and Woodbury, N.J. That firm closed, but Kwasnik still practices in Cherry Hill under the name Kwasnik Kanowitz & Associates.
Kwasnik Indicted on Four Counts
At the press conference, Taylor stated that the lawyer was indicted by a grand jury on four counts: theft by failure to make required disposition of property received; misapplication of entrusted property; theft by unlawful taking”; and financial facilitation of criminal activity, in this case money laundering. All four counts are in the second degree.
Kwasnik specializes in estate and financial planning and is admitted to the bar in New Jersey and Pennsylvania. He was hired by the elderly Cherry Hill woman to set up a family trust for the benefit of her and her children, as well as to help her administer the estate of her deceased sister, according to information released by the Attorney General’s Office.
The only living heir of her sister, Kwasnik’s elderly client was the sole beneficiary of the estate. Kwasnik, as the sole trustee of the client’s family trust, received checks from the sister’s estate, which were supposed to be deposited into the trust.
Between September and December 2006, Kwasnik received a total of $1.1 million in checks from the sister’s estate. He deposited the funds into a general trust account for clients maintained by his firm, the release said.
Although Kwasnik had a fiduciary duty to hold or invest the funds as assets of his elderly client’s family trust, he allegedly withdrew the funds and stole more than $1 million. A small amount was used on behalf of the client, and the rest was allegedly misappropriated for his Kwasnik’s own benefit and for other purposes, including the payment of other clients and payment of operating expenses for his firm, the release said.
Attorney General Dow
During the press conference, Attorney General Dow emphasized the importance of aggressively prosecuting criminals who prey on the elderly, a vulnerable segment of the population. Dow said Kwasnik is accused of taking advantage of the frailty of his client and the trust she placed in him to deceive and steal.
Taylor said the charges portray Kwasnik as “a cheat and a thief” who betrayed his oath as an attorney.
Second-degree crimes carry a maximum sentence of 10 years in state prison and a fine of $150,000. Money laundering carries an enhanced fine of up to $500,000, plus an additional profiteering penalty of $250,000, the release said. It also cautioned that an indictment is merely an accusation and the defendant is presumed innocent until proven guilty.
The case has been assigned to the Superior Court in Camden County, N.J. Kwasnik was indicted as a result of an investigation by the Financial and Computer Crimes Bureau of the New Jersey Division of Criminal Justice.
The Attorney General’s Office also announced that a civil suit has been brought against Kwasnik. He has been added as a defendant in a suit against Liberty State Financial Holdings Corp. and Liberty State Benefits of Pennsylvania Inc. The suit was brought by the New Jersey Bureau of Securities, within the Attorney General’s Division of Consumer Affairs.
The companies, which have filed for bankruptcy, specialize in buying life insurance policies at a discount from retirees.
The Liberty suit was filed in March. New charges in the suit allege that Kwasnik, his 70-year-old father William Kwasnik of Marlton, N.J., and other individuals defrauded investors of at least $5 million through a classic Ponzi scheme, according to the Attorney General’s release.
Misuse of Elderly Investors Funds
About $8.5 million was raised from 73 investors through the allegedly fraudulent scheme, most of them elderly and retired. Kwasnik and company sold unregistered securities, on which they promised an annual return of 12 percent.
Rather than the funds being invested as promised, they were allegedly misused at the direction of William Kwasnik. About $5 million was improperly transferred to his son’s law firm, and used by himself, his son and other relatives for their personal benefit. Other funds were used to pay existing investors in a classic Ponzi scheme fashion.
Also charged were former registered agent of a broker-dealer Daniel Francis McCorry of Ventnor; Michael William Kwasnik, 42, of Philadelphia and his father, William Kwasnik, 70, of Marlton; Joseph Anthony Schifano, 45, of Brick; and William P. Leonard, 83, of Cherry Hill, who is the secretary and treasurer of Capital Conservation Associates, Inc. and former chairman of the board of directors of LSFHC. Investors were allegedly told that funds raised by sale of the notes would be used to purchase life insurance policies and beneficial interests in irrevocable life insurance trusts, according to the attorney general.
Kwasnik was indicted on Nov. 4 on a range of criminal charges including theft by unlawful taking and money laundering and was apprehended in Alabama on Tuesday attempting to flee the country.
Guiliano Law Firm
The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Firm, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.