Former Philly-area attorney, father accused of $13 million Ponzi scheme
A former attorney, who previously had offices in Philadelphia and Cherry Hill, and his father have been indicted by federal authorities in an alleged $13 million Ponzi scheme.
Michael Kwasnik, 47, of North Miami Beach, Fla., and his father, William Kwasnik, 68, of Marlton, were indicted Thursday by a federal grand jury in Camden on five counts of fraud, seven counts of money laundering, and one count of conspiracy to commit money laundering.
The Kwasniks, who are not in custody, are to appear Tuesday before a federal magistrate in Camden for detention hearings. Michael Kwasnik has also been charged with eight counts of transacting in criminal proceeds.
He previously owned and operated Kwasnik, Rodio, Kanowitz & Buckley and its successor, Kwasnik, Kanowitz & Associates.
According to Thursday's federal indictment, the son and father, who owned and operated an insurance company, Abby Grant, in Lakewood and Cherry Hill, had carried out a scheme to defraud clients of Michael Kwasnik's law firm by diverting funds from clients' trust accounts to accounts controlled by the Kwasniks.
More than $13 million was collected from more than 40 clients over a three-year period, from October 2008 to November 2011, federal authorities allege.
The Kwasniks are accused of laundering ill-gotten funds through the entities they controlled, including Abby Grant and Liberty State Benefits of Pennsylvania.
Ultimately, they used at least $10 million of the stolen funds to pay operational expenses for their businesses and for personal expenses for themselves and their families, the indictment alleges.
The expenses included attorney fees incurred by the Kwasniks to defend themselves in various lawsuits; office leases; car payments; and credit card payments, the indictment says.
Richard Klineburger, Michael Kwasnik's attorney, said Saturday: "Michael, of course, is very disappointed that the grand jury returned an indictment after he presented many proofs showing this was, in fact, more of a situation of professional negligence rather than criminal conduct. He may have been a bad investor, but he's not a thief."
Daniella Gordon, William Kwasnik's attorney, said: "The indictment paints a very incomplete picture of events and William Kwasnik's involvement, and it's unfortunate that he's facing these charges. He believes he will ultimately be vindicated and we hope that happens sooner rather than later."
According to online records, Michael Kwasnik's law license has been suspended in Pennsylvania and New Jersey.
This is not his first time facing criminal charges.
In November 2011, he was criminally charged with bilking a 96-year-old Cherry Hill widow out of $1.1 million. He pleaded guilty to those charges. Jail time was limited to the five months that he had been held at the Camden County Jail following his arrest.
In October 2015, in a civil case, he and two other men were ordered by a New Jersey Superior Court judge to pay $14 million in restitution for running a Ponzi scheme that defrauded scores of elderly investors in New Jersey and Pennsylvania between 2008 and 2010.
The order stemmed from a civil suit brought by the New Jersey Bureau of Securities. Authorities had said Michael Kwasnik ran that scheme, which involved unregistered securities, through his investment company Liberty State Benefits of Pennsylvania, based for a time in Philadelphia and Cherry Hill.