TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that Michael W. Kwasnik, a Philadelphia
lawyer with offices in Cherry Hill, N.J.,
has been returned to New Jersey to face charges
that he stole more than $1 million from a
client. He was arrested last month in Alabama
on a warrant obtained by the Division of Criminal
Justice.
According
to Director Taylor, Kwasnik, 42, of Philadelphia,
was turned over to detectives of the Division
of Criminal Justice Financial and Computer
Crimes Bureau this morning at the U.S. Marshals
Office in Philadelphia. They transported
him to the Camden County Jail, where he
is being held on $1 million bail. Deputy
Attorney General Denise Grugan has filed
a motion in court asking that Kwasnik’s
bail be raised to $5 million and that a
bail source hearing be required so that
Kwasnik cannot use funds he allegedly obtained
fraudulently from his victims to post bail.
He currently is scheduled to be arraigned
on Jan. 23 by Superior Court Judge Irvin
J. Snyder in Camden.
Kwasnik
was arrested on Nov. 9 in Dothan, Alabama,
after police were alerted by a cab driver
that Kwasnik had behaved suspiciously as
the cabbie drove him and a female companion
to the local Greyhound bus station. When
Kwasnik identified himself to police at
the bus station, they learned that he was
wanted on the New Jersey warrant. Kwasnik
waived extradition and was held by federal
authorities until arrangements were made
for the U.S. Marshals Service to transport
him to this area.
The
Division of Criminal Justice Financial and
Computer Crimes Bureau obtained a state
grand jury indictment on Nov. 4 charging
Kwasnik in connection with the alleged theft
from the elderly client. Kwasnik is also
named in a lawsuit filed by the Attorney
General’s Office which charges that
Kwasnik, his father and other defendants
engaged in a fraudulent scheme in which
they raised approximately $8.5 million from
numerous elderly investors and misappropriated
the funds.
“We
allege that Kwasnik stole more than $1 million
dollars from a client, cheated investors
of millions more and, when he learned he
faced criminal charges, ran from the law,”
said Attorney General Dow. “With the
help of local police in Alabama and the
U.S. Marshals Service, we have brought him
back to New Jersey to face justice.”
“We
are continuing to investigate the alleged
fraudulent schemes of Michael Kwasnik,”
said Director Taylor. “While we do,
we want Kwasnik sitting in jail in New Jersey
where he belongs. We are asking that his
bail be raised to $5 million in light of
his evident attempt to flee prosecution.”
The
criminal case concerns an elderly client
from Cherry Hill who hired Kwasnik for estate
planning purposes. Kwasnik set up a family
trust for the client and her children, and
was also hired to help the client administer
the estate of her deceased sister. In 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 client’s family trust, he allegedly
withdrew the funds, stealing over $1 million.
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
operating expenses of his firm.
The
Attorney General's Office announced the
indictment on Nov. 7, the same day that
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 Bureau of Securities within
the Division of Consumer Affairs. The original
suit was filed in March 2011 against Liberty
State Financial Holdings Corporation and
Liberty State Benefits of Pennsylvania,
Inc.
The new charges allege that Kwasnik, his
father, William Kwasnik, 70, of Marlton,
N.J., and other individuals 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.
The
criminal 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.
Kwasnik
faces second-degree charges of theft, misapplication
of entrusted property and money laundering,
which carry a maximum sentence of 10 years
in state prison. The indictment is merely
an accusation and the defendant is presumed
innocent until proven guilty. More details
regarding the indictment are included in
the Nov. 7 press release at www.njpublicsafety.com.