Former New Jersey Attorney and Father Indicted in Connection with $13 Million Ponzi Scheme
CAMDEN, N.J. – A former New Jersey attorney and his father have been indicted for their respective roles in a $13 million Ponzi scheme, U.S. Attorney Paul J. Fishman announced today.
Michael W. Kwasnik, 47, of North Miami Beach, Florida, and William M. Kwasnik, 68, of Marlton, New Jersey, were indicted Feb. 16, 2017, by a federal grand jury on three counts of wire fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, and seven counts of money laundering. Michael Kwasnik was also charged with eight additional counts of transacting in criminal proceeds. The defendants are both scheduled to appear Feb. 21, 2017, before U.S. Magistrate Judge Karen M. Williams in Camden federal court.
Michael Kwasnik previously owned and operated a law firm, Kwasnik, Rodio, Kanowitz and Buckley P.C. – and its successor firm, Kwasnik, Kanowitz and Associates P.C. – with offices in Cherry Hill, New Jersey, and Philadelphia, Pennsylvania. William Kwasnik owned and operated an insurance company, Abby Grant, in Lakewood and Cherry Hill, New Jersey.
According to documents filed in this case and statements made in court:
From October 2008 to November 2011, Michael and William Kwasnik controlled a number of entities, including Liberty State Financial Holdings Corp. and its subsidiaries (Liberty State Benefits of Pennsylvania; Liberty State Benefits of Delaware; Liberty State Insurance Services; Liberty State Wealth Management; and Liberty State Credit) and Oxbridge Investors Fund; OPIS Management Fund; and Capital Management of Delaware.
The Kwasniks allegedly carried out a scheme to defraud clients of the Kwasnik law firm by diverting funds from their trust accounts to themselves and the entities they controlled. Michael Kwasnik and others induced clients to establish various types of trusts based on misrepresentations and false pretenses. Michael Kwasnik named himself as the clients’ trustee and directed clients to transfer their money, property and other assets into their trust accounts. Michael Kwasnik then transferred the money out of the clients’ trust accounts and into accounts which he and his father controlled. More than $13 million was collected from more than 40 clients over the three-year period. The Kwasniks laundered the funds through the entities they controlled and Abby Grant before ultimately using the stolen funds to pay for legal and operational expenses of the entities they controlled, the law firm, and personal expenses.
Each count of wire fraud, mail fraud and money laundering carries a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Each count of transacting in criminal proceeds carries a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael T. Harpster, Philadelphia Division, and special agents of IRS Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, Newark Division, with the investigation leading to the indictment.
The government is represented by Assistant U.S. Attorney Sarah Wolfe of the U.S. Attorney’s Office in Trenton.
The charges and allegations in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.