Legal Education

Finance law prof gets probation for not paying taxes after being accused of embezzling millions of dollars

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A bankruptcy and corporate finance law professor, who recently pleaded down his federal wire and mail fraud charges to a failure to pay taxes misdemeanor, was sentenced Thursday to two years' probation.

In 2017, Edward S. Adams, a University of Minnesota law professor, was charged with taking more than $4.38 million from investors in a diamond company he was involved with, the Star Tribune reports. In a plea agreement filed with the court in October, Adams pleaded guilty to one count of willful failure to provide information.

“I have always maintained my innocence as to the original charges that were brought against me, and I am grateful that all of them have been dismissed. I look forward to putting this whole episode behind me and moving on with my life. I have been very fortunate to have the support of my wife and son, friends, and colleagues throughout this process, and I cannot thank them enough,” Adams said in a statement he emailed to the ABA Journal.

The federal government would not comment on why it agreed to the plea agreement, the Star Tribune reports. A December 2017 superseding indictment stated that Adams was involved with Apollo Diamond and Apollo Gemstone, which created laboratory-grown diamonds and diamond materials. The businesses were founded by Adams’ father-in-law, and his brother-in-law was an employee, according to the document. It also stated that Adams’ in-laws had “little or no oversight” on his ongoing fundraising, and financial decisions were “routinely” left to him.

The indictment claimed that in 2003, Apollo raised more than $25 million in capital, though a financial services firm that had Adams as a principal. The filing alleged that between 2006 and 2013, Adams took more than $4.38 million from investors and payed more than $2.45 million to his law firm, Adams Monahan. The indictment also stated that Adams unilaterally decided what the business would pay his law firm and signed most of the checks.

Regarding the IRS, Adams from 2008 to 2010 underreported his income for about $596,000, according to the Star Tribune. In 2018, he reached an agreement with the agency to pay $118,000 in taxes.

Adams is on paid leave from the University of Minnesota, and his annual salary is $170,820, the newspaper reported. The government asked for one year of probation, according to the article, but U.S. District Court Judge Donovan Frank said that Adams deserved a longer probation, due to his role as a tenured law professor. The sentence also includes paying $5,000 in fines and completing 200 hours of community service with legal aid organizations.

According to the Star Tribune, a spokesperson for the law school said that it has not decided whether Adams will continue teaching at the law school.

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