A Philadelphia estate lawyer accused by New Jersey of heading an $8.5 million Ponzi scheme that targeted retirees has been charged with money laundering in a separate case.
An indictment unsealed Monday alleges that Michael Kwasnik stole more than $1 million from a client whose trust he was overseeing, using the money instead to pay investors and his law office’s operating expenses.
Prosecutors allege that instead of depositing his client’s money into the client’s family trust, Kwasnik put the funds into a general account for his law firm.
Last week, the 42-year-old Kwasnik was sued in civil court by the state, which asked for restitution and a court order to stop him and others associated with him from selling investment securities in New Jersey.
Kwasnik, who has a law office in Cherry Hill but also practices in Pennsylvania, has previously denied any wrongdoing. Kwasnik sold investments through Liberty State Financial Holdings Corp. and its subsidiary, Liberty State Benefits of Pennsylvania. The companies, which specialize in buying life insurance policies at a discount from retirees, filed for bankruptcy in July.
In the civil case, the government alleges Kwasnik headed a Ponzi scheme involving the sale of so-called “life settlements,” which ostensibly offered retirees lump-sum payments for part of the policies but in many cases cost them much or all of their investment. Life settlement companies typically buy life insurance policies from elderly policyholders, with a purchase price based on the policyholder’s life expectancy.