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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a lawyer from Philadelphia
with a law office in Cherry Hill, N.J.,
has been indicted on charges he stole more
than $1 million from a client.
According
to Director Taylor, Michael W. Kwasnik,
42, of Philadephia, was charged in a four-count
state grand jury indictment with theft by
failure to make required disposition of
property received, misapplication of entrusted
property, theft by unlawful taking, and
financial facilitation of criminal activity
(money laundering), all in the second degree.
The indictment was returned on Friday, Nov.
4, but was sealed by the court until today.
A warrant has been issued for Kwasnik’s
arrest, with bail set at $1 million.
The
indictment is the result of an investigation
by the Division of Criminal Justice Financial
and Computer Crimes Bureau. Kwasnik, who
specializes in estate and financial planning,
is licensed as a lawyer in New Jersey and
Pennsylvania. He was hired by an elderly
woman from Cherry Hill, who is not named
in the indictment, for estate planning purposes.
In that role, Kwasnik set up a family trust
for the benefit of the client and her children.
He was also hired to help the client administer
the estate of her deceased sister. The client
was the only living heir of her sister and
the sole beneficiary of the estate. Kwasnik,
who was designated sole trustee of the client’s
family trust, received checks from the estate,
which the client expected him to deposit
into the family trust.
Between
September and December 2006, Kwasnik received
checks from the estate totaling about $1.1
million, which he deposited into a general
trust account for clients maintained by
his law firm. However, rather than holding
or investing the funds as assets of the
elderly client’s family trust, he
allegedly withdrew the funds from that account
within a few months, stealing more than
$1 million. With the exception of a small
amount used on behalf of the client, Kwasnik
allegedly misappropriated the funds for
his own benefit and for other purposes unrelated
to the administration of the estate, including
paying other clients and paying the operating
expenses of his law firm.
“We
charge in our criminal case that Kwasnik
exploited an elderly client, misappropriating
more than $1 million she intended to give
to her children,” said Attorney General
Dow. “Just as we allege in our lawsuit
that Kwasnik preyed on elderly investors,
we charge in the indictment that he took
advantage of the frailty of this client
and the trust she placed in him in order
to deceive and steal. We will aggressively
prosecute criminals who prey on this vulnerable
segment of our population.”
“We
charge that Kwasnik is a cheat and a thief
who betrayed his oath as an attorney to
uphold the law,” said Director Taylor.
“We are continuing to investigate
his various financial schemes, and we urge
anyone with relevant information to contact
us.”
Director
Taylor noted that the Division of Criminal
Justice has established a toll-free Tipline
1-866-TIPS-4CJ for the
public to report financial fraud, corruption
and other crimes. The public also can log
on to the Division’s Web page at www.njdcj.org
to confidentially report suspected wrongdoing.
The
case was investigated and presented to the
state grand jury by Sgt. James Blong, Deputy
Attorney General Denise Grugan and Deputy
Attorney General Peter Gallagher of the
Division of Criminal Justice Financial and
Computer Crimes Bureau, under the supervision
of the bureau’s chief and deputy chief,
Supervising Deputy Attorney General Terrence
Hull and Deputy Attorney General Francine
S. Ehrenberg.
At
the time of the alleged conduct, Kwasnik
was managing partner of the law firm of
Kwasnik, Rodio, Kanowitz and Buckley, which
had offices in Cherry Hill and Woodbury.
That firm closed, but Kwasnik practices
law in Cherry Hill under the firm name Kwasnik,
Kanowitz and Associates.
Second-degree
crimes carry a maximum sentence of 10 years
in state prison and a fine of $150,000.
The money laundering count carries an enhanced
fine of up to $500,000, plus an additional
anti-money laundering profiteering penalty
of $250,000.
The
indictment is merely an accusation and the
defendant is presumed innocent until proven
guilty.
The
indictment was handed up to Superior Court
Judge Pedro J. Jimenez Jr. in Mercer County,
who assigned the case to Camden County,
where the defendant will be ordered to appear
in court to be arraigned on the charges.
The
Attorney General's Office also announced
action today against Kwasnik in a civil
lawsuit. Kwasnik was named as a defendant
in connection with new charges filed in
a pending lawsuit brought by the Attorney
General's Office through the New Jersey
Bureau of Securities, within the Division
of Consumer Affairs. The suit was filed
in March against Liberty State Financial
Holdings Corporation and Liberty State Benefits
of Pennsylvania, Inc.
The new charges in the lawsuit allege that
Kwasnik, his father, William Kwasnik, 70,
of Marlton, N.J., and other indiviuals engaged
in a fraudulent scheme whereby approximately
$8.5 million was raised from 73 investors,
most of them elderly and retired, by selling
unregistered securities, on which they promised
an annual return of 12 percent. It is alleged
that rather than investor funds being invested
as promised, investor funds were misused,
at the purported direction of William Kwasnik,
including the improper transfer of approximately
$5 million to Michael Kwasnik's law firm,
and to Michael Kwasnik, William Kwasnik
and other relatives for their personal benefit,
while other funds were used to pay existing
investors in the classic fashion of a Ponzi
scheme.
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