Sunday, March 05, 2017

After Having Already Served Time Relating To State AG's Prosecution For Major Client Ripoffs, Ex-Attorney Now Faces 'Round 2' With NJ Feds In Connection w/ Fleecing Trust Funds; Lawyers' Client Protection Fund Has Already Coughed Up Over $8.3 Million To Defendant's Victims For Loss Reimbursements

From the Office of the U.S. Attorney (Camden, New Jersey):
  • A former New Jersey attorney and his father have been indicted for their respective roles in a $13 million Ponzi scheme,(1) U.S. Attorney Paul J. Fishman announced today [February 17].

    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.(2)
    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, [... t]he 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.(3) 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.
Source: Former New Jersey Attorney and Father Indicted in Connection with $13 Million Ponzi Scheme.
(1) See generally, Frederick Miller, "If You Can't Trust Your Lawyer .... ?", 138 Univ. of Pennsylvania Law Rev. 785 (1990) for more on the apparent, long-standing tolerance for deceit by many in the legal profession (while Professor Miller's essay is over a quarter-century old, it appears that his observations maintain their vitality to this day):
  • This tolerance to deception is encouraged by the profession's institutional civility. Seldom is a fig called a fig, or a shyster a shyster. No, our euphemisms are wonderfully polite: "frivolous conduct," or a "lack of candor;" or "law-office failure;" or, heaven forbid, a "peculation," a "defalcation," or a "negative balance" in a law firms's trust account.

    There is also widespread reluctance on the part of lawyers --- again, some lawyers --- to discuss publicly, much less acknowledge, that they have colleagues who engage in deceit and unprofessional conduct.

    This reluctance is magnified when the brand of deceit involves the theft of client money and property, notwithstanding that most lawyers would agree that stealing from clients is the ultimate ethical transgression.
    The fact is, however, that theft of client property is not an insignificant or isolated problem within the legal profession. Indeed, it is a hounding phenomenon nationwide, and probably the principal reason why most lawyers nationwide are disbarred from the practice of law.
(2) Kwasnik has already faced prosecution for state law crimes by the New Jersey Attorney General's office in connection with client ripoffs. See Lawyer Sentenced for Laundering Funds Misappropriated from Clients (Michael Kwasnik served five months in jail and must pay $1.2 million in restitution).

According to the itemized list issued by the New Jersey Lawyers' Fund for Client Protection for the third quarter of year 2015 claim awards for whom reimbursement payouts to victimized clients were made, the Fund had already coughed up $8,308,920.16 to former clients for their losses suffered by Kwasnik's handiwork.

The New Jersey Lawyers' Fund for Client Protection was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar.

For similar "attorney ripoff reimbursement funds" that attempt to clean up the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

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