Minnesota-based Attorney and Law Professor Edward S. Adams was indicted last week on criminal fraud charges in a U.S. District Court in Minneapolis. Adams is accused of embezzling more than $4.38 million dollars from investors in companies which he ran.
Edwards S. Adams’ website for his law firm, Adams Grumbles LLP boasts a section, describing the attorney’s qualifications and accolades. As usual, the page makes note of Adams education (cum laude from the University of Chicago Law School), his experience as a law professor at the University of Minnesota Law School, and his expertise as an attorney (corporate finance and corporate law, securities, bankruptcy, and entrepreneurship). However, the website conveniently (and understandably) leaves out what Adams is probably most known for at this point. This past week, Adams was indicted on Embezzlement charges in a U.S. District Court in Minneapolis. Specifically, Adams was charged with eight counts of mail fraud and six counts of wire fraud.
Also as mentioned on his website, Adams is an entrepreneur who holds different entrusted positions in several businesses. One of these businesses, Apollo Diamond Inc., is a company that produces laboratory-grown diamonds. According to the recent indictment, Adams deposited money provided by investors into several accounts under his control. Allegedly, Adams falsely told the investors that their money would be used for the company’s operations. However, Federal investigators claim that instead of properly dispersing the funds as they were intended, he stole the funds. The indictment alleges that Adams paid his own law firm (the aforementioned Adams Grumbles LLP) a whopping $2.5 million dollars. Reportedly, this ongoing scheme went on from 2006 to 2013. The diversion of the investment money eventually put Apollo Diamond in a very tough spot financially.
Embezzlement is a type of property theft. The law dictates that it occurs when a defendant who was entrusted to manage or monitor someone else’s money or property, steals all or part of that money or property for the defendant’s personal gain. The key is that the defendant had legal access to another’s money or property, but not legal ownership of it. Taking the money or property for the defendant’s own gain is stealing; when combined with the fact that this theft was also a violation of a special position of trust, you have the unique crime of embezzlement.
In Minnesota, embezzlement is punished according to the value or type of property stolen, with the possibility of increased penalties for defendants with previous felony convictions (Mn. Stat. Ann. § 609.52.). According to this law, if an individual steals more than $35,000 penalties include a fine of up to $100,000, up to 20 years in prison, or both. Additionally, if found guilty Adams would likely lose his bar license, preventing him from practicing law.
The alleged embezzlement in itself is a very serious felony. However, the alleged crime doesn’t stop there. In fact, this is where it gets interesting. According to the Star Tribune (a local Minneapolis newspaper):
To keep the theft from being uncovered through bankruptcy litigation, Adams convinced shareholders to convert their worthless Apollo stock into stock in a new company — Scio Diamond Technology Corp. — that Adams secretly controlled, according to the indictment.
Federal officials allege Adams used the new company to raise $2 million and then funneled most of it into bank accounts that he controlled.
A detailed article about this rebirth in 2011 was written called, “The Second Coming of Apollo; Reborn as Scio“.
The Star Tribune is intimately familiar with Adams and his suspicious business practices. The publication published a story on Adams outlining allegations as far back as 2003. Apparently, Adams sued the newspaper, claiming defamation, after the article was published. Adams’ indictment, no doubt, is a significant fall from grace. According to The Buffalo News (Buffalo New York’s local newspaper), Adams was a finalist to become the next dean of the University at Buffalo Law School. The dean position, in any law school, is usually given to the most knowledgeable and ethically upright attorneys in the country.
In the meantime, Scio Diamond appears to remain in operation, selling a variety of single-crystal, lab-grown diamonds that are finished for fine jewelry, or cores that are sliced and shaped for industrial applications.