A Ponzi scheme based out of Cherry Hill allegedly bilked $8.5 million from 73 investors, most of them elderly or retired, according to state Attorney General Paula T. Dow. And one of the defendants involved is also charged with swindling an woman out of $1 million.
Philadelphia attorney Michael W. Kwasnik, who has a law office in Cherry Hill, has been charged along with his father William Kwasnik, 70, of Marlton, and other co-defendants in the Ponzi scheme. The younger Kwasnik is also charged with funneling $1 million from a family’s trust fund.
In the first charge, the Kwasniks sold unregistered securities, on which they promised an annual return of 12 percent. Instead of investing the funds as promised, however, the group allegedly transferred about $5 million to Michael Kwasnik’s law firm, and to Michael Kwasnik, William Kwasnik and other relatives for their personal use.
“… Other funds were used to pay existing investors in the classic fashion of a Ponzi scheme,” according to a press release from the Attorney General’s office.
Much of these charges are new actions taken in a lawsuit filed in March against Liberty State Financial Holdings Corporation and Liberty State Benefits of Pennsylvania Inc.
According to the other indictment that was announced Monday, Michael Kwasnik also had been hired by an elderly woman from Cherry Hill to set up and manage a trust fund for her and her children, and to administer the estate of her deceased sister.
Between September and December 2006, Kwasnik received checks from the estate totaling $1.1 million, which he was supposed to deposit into the family trust. Instead, he put it into a general trust account, then, rather than invest it, allegedly withdrew more than $1 million, spending it on himself and various other inappropriate purposes, including paying other clients, the indictment says.
In that case, Kwasnik, 42, is charged with theft by failure to make required disposition of property received, misapplication of entrusted property, theft by unlawful taking, and financial facilitation of criminal activity (money laundering), all in the second degree. Each crime carries a maximum sentence of 10 years in state prison and a fine of $150,000. The money laundering count carries an enhanced fine of up to $500,000, plus an additional anti-money laundering profiteering penalty of $250,000.
