March 23, 2017 05:06 PM
A longtime University of Minnesota law professor is under indictment by a federal grand jury in Minneapolis on charges he orchestrated an elaborate fraud scheme designed to embezzle millions of dollars of investors' funds.
Edward Adams, a university faculty member for 25 years who teaches students how to navigate the complex world of corporate finance and bankruptcy, is accused of stealing more than $4.38 million from investors from 2006-13.
Over that time, he paid his own law firm $2.54 million, according to the U.S. Attorney's Office for Minnesota, which announced the indictment Wednesday afternoon.
5 EYEWITNESS NEWS reached out to Adams seeking comment from either him or his attorney. As of Wednesday night, calls and emails had not been returned.
But he told 5 EYEWITNESS NEWS in an interview earlier this month he had not been contacted by federal investigators and was not aware of a criminal investigation against him.
According to the indictment, Adams, 64, held various managerial titles with Apollo Diamond Inc. and Apollo Diamond Gemstone Corporation (collectively known as Apollo), a privately-held company that produced lab-grown diamonds.
In 2003, at his direction, the company retained his financial services firm to provide investment banking services and raise money.
His fundraising efforts raised more than $25 million for Apollo, for which his firm received around $4 million. And it led to Adams handling ongoing financial matters for Apollo with 'minimal oversight from the Board of Directors.'
The indictment states that Adams then told investors they could purchase shares in Apollo by making checks payable to bank accounts he controlled. But he is alleged to have embezzled that money.
The indictment further states that in 2010, his embezzlement meant Apollo could no longer meet its financial obligations. It is then that Adams is accused of devising a scheme in which shareholders converted worthless Apollo stock into a new company, which he secretly controlled.
As part of a settlement with investors in 2014, Adams resigned as a director of that company - Scio Diamond Technology Corp.
His resignation came shortly after the U.S. Securities and Exchange Commission (SEC) subpoenaed documents related to the company's corporate transactions, according to public filings.
Adams told 5 EYEWITNESS NEWS he had been contacted by SEC investigators but they "determined there was nothing going on," he said. Adams also said he received a letter from the SEC in February stating the commission is no longer conducting an investigation.
However, according to the most recent financial report filed with the SEC in February, the "company is fully co-operating with this ongoing inquiry."
Phone calls to the company's headquarters in Greenville, S.C. were not returned.
In 2013, a group of Scio investors filed a federal lawsuit against the company's board of directors, including Adams, accusing them of engaging in self-dealing and self-interested transactions. A judge ordered the investors to pursue their complaint through arbitration and dismissed the lawsuit.
Adams joined the law school's faculty in 1992. He served as the law school's associate dean for academic affairs from 1997 to 2000.
A spokesperson for the University of Minnesota Law School, said Wednesday night: "We are aware of the announcement earlier today by the U.S. Attorney's Office involving a University faculty member. The announcement describes alleged activities fully outside of the faculty member’s role with the University, and we do not have anything further to share at this time."
Joe Augustine and Brandi Powell
Updated: March 23, 2017 05:06 PM
Created: March 22, 2017 06:32 PM
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