TRENTON
– Attorney General Jeffrey S. Chiesa
announced that Michael W. Kwasnik, a lawyer
who already is in jail for allegedly stealing
over $1 million from a 96-year-old client
in New Jersey, was indicted today on new charges
that he stole over $324,000 from the proceeds
of a personal injury settlement that his law
partner recovered for a married couple.
In
addition to the criminal charges, the Attorney
General’s Office previously filed
a civil lawsuit charging Kwasnik, his father
and other individuals with engaging in a
fraudulent scheme in which 73 investors,
most of them elderly, lost $8.5 million.
Kwasnik,
42, of Philadephia, who has a law office
in Cherry Hill, was charged today in a three-count
state grand jury indictment with theft by
failure to make required disposition of
property received, misapplication of entrusted
property, and money laundering, all in the
second degree. Kwasnik was already lodged
in the Camden County Jail with bail set
at $1 million as the result of an indictment
unsealed on Nov. 7 that charged him with
the alleged theft from the 96-year-old client,
a woman from Cherry Hill. Superior Court
Judge Thomas W. Sumners Jr. today increased
Kwasnik’s bail by $250,000 in connection
with the new indictment. Both indictments
stem from an ongoing investigation by the
Division of Criminal Justice Financial &
Computer Crimes Bureau. Kwasnik is scheduled
to appear tomorrow at 1:30 p.m. before Superior
Court Judge Michael J. Kassel in Camden
for a bail source hearing.
“Once
again, we have indicted Michael Kwasnik
for stealing a large sum of money from a
client,” said Attorney General Chiesa.
“The allegations in our criminal and
civil actions reveal a disturbing pattern
in which Kwasnik has repeatedly violated
the trust placed in him as an attorney and
has ruthlessly taken advantage of elderly
investors and clients. We will not tolerate
this type of conduct and we are continuing
to investigate him.”
“When
people hire a lawyer, they typically are
looking for a professional they can trust
to guide them through matters beyond their
own sphere of knowledge – often matters
involving high financial stakes,”
said Director Stephen J. Taylor of the Division
of Criminal Justice. “When a lawyer
takes advantage of that trust to steal,
as we allege Kwasnik did, the results can
be devastating.”
The
alleged victims in the new indictment, a
married couple from Williamstown, N.J.,
had hired Kwasnik’s former law firm,
Kwasnik, Kanowitz & Associates, to represent
them in a personal injury lawsuit. Kwasnik’s
partner had successfully settled the matter
for the couple for $485,000, which was deposited
in October 2011 into a trust account for
clients maintained by the law firm. Under
the terms of the settlement, the couple
was entitled to receive $324,118, representing
the full settlement amount minus the law
firm’s fees of over $151,000 and certain
other costs previously paid by the firm.
However, it is alleged that between Nov.
1 and Nov. 7, Kwasnik made unauthorized
transfers of funds totaling $483,580 out
of the client trust account and into a new
bank account he had opened. In taking that
sum, he allegedly stole the amount that
the couple was entitled to receive.
Between
Nov. 1 and Nov. 8, 2011, Kwasnik allegedly
disbursed over $270,000 of the transferred
funds from the new bank account to pay expenses
of the law firm, as well as more than $12,000
in personal expenses and credit card debt.
It is further alleged that on Nov. 7, after
being notified of the prior indictment and
while allegedly traveling in Florida to
evade prosecution, Kwasnik withdrew $8,000
in cash from the account. Investigators
had the bank account frozen after Kwasnik
was arrested in Dothan, Alabama, on Nov.
9 on a warrant obtained by the Division
of Criminal Justice. At the time of his
arrest, blank checks for the bank account
were found in his possession.
In the prior indictment, the 96-year-old
client from Cherry Hill 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 the 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.
He allegedly misappropriated the funds for
his own benefit and other purposes unrelated
to the administration of the estate, including
paying other clients and paying the operating
expenses of his law firm. At that time,
Kwasnik was managing partner of the law
firm of Kwasnik, Rodio, Kanowitz and Buckley.
In that case, Kwasnik is also charged with
theft by failure to make required disposition
of property received, misapplication of
entrusted property, and money laundering,
all in the second degree.
The
criminal cases were presented to the state
grand jury and investigated by Deputy Attorney
General Denise Grugan, Deputy Attorney General
Peter Gallagher and Sgt. James Blong 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.
Second-degree
crimes carry a maximum sentence of 10 years
in state prison and a fine of $150,000.
Second-degree money laundering carries an
enhanced fine of up to $500,000, plus an
additional anti-money laundering profiteering
penalty of $250,000. The indictments are
merely accusations and the defendant is
presumed innocent until proven guilty.
The
new indictment was handed up to Superior
Court Judge Thomas W. Sumners Jr. in Mercer
County, who assigned the case to Camden
County. A copy of the indictment is posted
with this release at www.njpublicsafety.com.
On
Nov. 7, the day the first indictment was
unsealed, Kwasnik was named as a defendant
in a pending civil lawsuit which had been
filed in March by the New Jersey Bureau
of Securities, within the Division of Consumer
Affairs, against two corporate defendants
linked to Kwasnik, Liberty State Financial
Holdings Corporation and Liberty State Benefits
of Pennsylvania, Inc. The new charges in
the civil suit alleged that Kwasnik, his
father, William Kwasnik, and other individuals
engaged in a fraudulent scheme in which
about $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, they 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.