We have written here and here about the case of attorney Michael Kwasnik, who is facing charges of having stolen over $1 million from mostly elderly clients. Last week, Mr. Kwasnik’s insurance carrier filed a declaratory judgment action in the District of New Jersey, seeking to avoid having to provide coverage for the theft. Most professional liability insurance policies include some type of exclusion for intentional acts, although the scope of that exclusion can vary widely. The upshot of such provisions is that when an attorney commits an intentional act, especially a criminal act, as Mr. Kwasnik is accused of doing, there may be no coverage for the attorney, and a severely limited chance of recovery for the victims. If Mr. Kwasnik’s insurance carrier is successful, the victims will have to seek recovery out of whatever assets Mr. Kwasnik may have left.
Posts Tagged ‘Michael Kwasnik’
We have previously written about attorney Michael Kwasnik’s legal troubles. Mr. Kwasnik is facing charges that he stole over $1 million from clients. The total amount of his alleged theft has been raised to $1.3 million, and he was indicted on Tuesday for new charges of theft by failure to make required disposition of property received, misapplication of entrusted property, and money laundering, all in the second degree. Mr. Kwasnik is also a party to civil lawsuit brought by the New Jersey attorney general charging him, his father and others with a fraudulent scheme in which 73 mostly elderly investors lost $8.5 million.
Mr. Kwasnik has incurred the full wrath of the criminal justice system. “When people hire a lawyer, they typically are looking for a professional they can trust to guide them through matters beyond their own sphere of knowledge – often matters involving high financial stakes,” said Director Stephen J. Taylor of the Division of Criminal Justice. “When a lawyer takes advantage of that trust to steal, as we allege Kwasnik did, the results can be devastating.”
It is important to remember that malpractice avoidance and professional liability avoidance requires attorneys avoid stealing from their clients. Not only will it lead to criminal charges, but it can also lead to disciplinary action under Rule 8.4 of the Rules of Professional Conduct, and civil lawsuits with charges of legal malpractice and breach of fiduciary duty.
We have blogged before about lawyers and Ponzi schemes. The New Jersey State Supreme Court on Wednesday suspended the license of attorney Michael Kwasnik who has been charged with stealing $1.1 million from an elderly client in Cherry Hill (he has not yet been suspended in Pennsylvania), and is being investigated with respect to an $8.5 million Ponzi scheme. Mr. Kwasnik was arrested in Alabama last month, with a passport and maps, after being turned in by a taxi driver who thought he was acting suspiciously.
In September 2009, Mr. Kwasnik was added as a defendant to a lawsuit brought by the FTC involving home loan modifications, and ethics charges have been pending in New Jersey since December 2008. The Philadelphia Inquirer has put together a good series of articles on Mr. Kwasnik. If Mr. Kwasnik is convicted, he will certainly face disciplinary proceedings under Rule 8.4 of the Rules of Professional Conduct.
-Josh J.T. Byrne, Esquire (H.T. BCB)