A University of Minnesota law professor admitted in federal court Thursday to underreporting nearly $600,000 in income to the Internal Revenue Service.
Edward S. Adams originally faced a much more serious 14-count indictment alleging he orchestrated a scam to embezzle millions from investors. In taking a plea deal, he pleaded guilty to one of those charges, a misdemeanor crime likely to result in no prison time.
Adams joined the university’s law school in 1992 and specializes in commercial, bankruptcy and corporate law. He’s still a university employee, and he’s been on paid leave since 2017, said Jake Ricker, a spokesman for the law school, in an e-mail. His salary is $170,820 a year.
In light of Adams’ plea Thursday, Ricker said, “his status will be reviewed in accordance with University policies and procedures.”
Adams’ attorney declined to comment for this story.
Because Adams avoided a felony offense, it’s unclear if he will lose his license to practice law.
According to the plea agreement, Adams underreported his federal tax income from 2008 to 2010, including failing to report the sale of stock in 2008, 2009 and 2010 for a total of $596,000. In an agreement with the IRS in 2015, he paid $118,000 in taxes owed on that income, according to court documents.
The original indictment alleged Adams stole more than $4.38 million from investors and paid more than $2.54 million to his own law firm. Adams held several positions at Apollo Diamond and Apollo Diamond Gemstone Corp. According to the charges, he defrauded investors by misrepresenting where their money would be going. Instead of to those companies, the money went to accounts Adams controlled.
Adams later persuaded shareholders to convert their Apollo stock into stock in a new company — Scio Diamond Technology Corp. — that Adams secretly controlled, according to the indictment.
In 2017, the FBI special agent in charge of Minneapolis said Adams’ crimes were “compounded by the fact that he holds positions of public trust as an attorney and law school faculty member.”
Adams previously sued the Star Tribune for defamation after the newspaper published a story about his business, though he has since dropped the suit.
U.S. District Judge Donovan Frank set sentencing for Jan. 23. The maximum penalty for the crime is up to a year in prison, $100,000 in fines and one year of supervised release. However, given Adams has no prior criminal history, he’s likely to get a lesser sentence per Minnesota sentencing guidelines.