Retirees allege investment fraud and fault Philadelphia lawyer

One in an occasional series.

Fred Demeo was on edge, worried about the dark clouds hovering over Wall Street and his plummeting retirement account.

It was March 12, 2009, a bad day in a brutal recession, and financial markets had slipped to nearly half the value of 16 months earlier.

Demeo opened the door of his tiny gray ranch house in Toms River on the Jersey Shore and ushered in three well-dressed men who said they were there to help him manage his money.

Michael Kwasnik, a lawyer based in Philadelphia, handed Demeo a card that said he was "founding chairman" of Liberty Bell Bank in Evesham Township. The two others, securities salesmen Joseph Schifano and Daniel McCorry, who had been providing investment advice to Demeo for nearly a decade, had set up the meeting.

The task of separating Demeo from his money was about to begin.

As Beverly Demeo offered the visitors coffee and cake, the three men hovered over her 72-year-old husband.

They warned that one of his annuities, with ING, was "about to tank." That he was too old to be in the stock market. That the big mortgage companies and investment houses were about to fail.

They had a better idea.

They urged Demeo to take his money out of ING and invest in Liberty State Benefits of Pennsylvania, an investment company Kwasnik's father ran. According to Demeo, McCorry said Liberty State Benefits was such a good prospect that his own mother had invested in it.

"Just do it, just do it," Schifano barked to an ING representative when Demeo put him on the phone to discuss cashing out the annuity.

For Demeo, the investment in Liberty State Benefits ended badly. Although Kwasnik returned his $71,000 six weeks later under pressure from Demeo's lawyer, Demeo says he later learned from ING that cashing out the investment had caused him to forfeit a $234,000 life-insurance policy.

It was a benefit he had already paid for. He says Kwasnik and the others never told him he would lose the life insurance. Kwasnik disputes Demeo's account, saying he knew the consequences.

Yet Demeo is adamant. The retired corrections officer testified later in a lawsuit against Kwasnik and the others: "I felt confused and a little scared. I didn't know what to say, really. They said get rid of it, dump it, get into this. I knew right away I had made a mistake."

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