A federal judge sentenced University of Minnesota financial law professor Ed Adams to two years of probation and $5,000 in fines Thursday for lying to the Internal Revenue Service.
Judge Donovan Frank said Adams deserved a harsher sentence than the one year of probation that prosecutors requested because of his role as a tenured professor who should be setting an example for up-and-coming lawyers.
“You clearly knew more than most that what you were doing was illegal and unethical,” said Frank.
Still, the punishment is much lighter than what Adams could have faced if he had been convicted on the original charges.
A 2017 indictment alleged Adams masterminded a complicated embezzlement scheme that bilked millions from investors through a diamond company he ran. Through a deal with the U.S. Attorney’s Office, Adams pleaded guilty to only a misdemeanor offense last October, and prosecutors dropped 17 other counts.
Adams has been on paid leave from the university, earning $170,820 per year, according to law school spokesman Jake Ricker. The school has not yet decided if Adams will go back to teaching now that his case is finished, said Ricker.
The plea agreement states that Adams underreported income on his federal taxes 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.
In a brief statement before the court Thursday, Adams apologized for his crimes.
“I promise you I will never find myself in this situation again,” he said.
“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,” Adams said in a statement after the sentencing.
The U.S. Attorney’s Office would not speak to why it agreed to the lower plea. The prosecutor who secured the indictment in 2017 is no longer with the office. Assistant U.S. Attorney Joseph Thompson, who appeared at the sentencing, declined to comment afterward.
The 2017 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 court Monday, Adams’ attorney, Joseph Petrosinelli, asked Frank for six months of probation and no fines, saying Adams had cooperated during the past three years of court procedures and calling the crime an “aberration” on an otherwise unblemished record. “There’s nothing about his circumstances that would call for a lengthy probation period,” said Petrosinelli.
Frank said he received 27 letters from 32 alleged victims of the fraud scheme before sentencing. But he could not consider any of those in rendering his punishment, Frank said, because prosecutors agreed to drop all charges pertaining to the crimes the letters alleged.
He called Adams a professor of “high regard” at the college and said Adams could apply for early release from probation in a year. He also ordered Adams to pay $5,000 in fines. Adams must complete 200 hours of community service with Southern Minnesota Regional Legal Services or Volunteer Lawyers Network, both legal aid services that connect low-income people with lawyers, Frank said.