Legal Industry News

December 14, 2011

Philadelphia Lawyer Transported to New Jersey to Face Charges that He Stole More Than $1M from Client in Cherry Hill, N.J.

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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, according to case information released by New Jersey State Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor.

He was arrested last month in Alabama on a warrant obtained by the Division of Criminal Justice.

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, 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.

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.