Candidate for dean of UB Law School charged in embezzlement scheme - The Buffalo News

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Candidate for dean of UB Law School charged in embezzlement scheme

A finalist to become the next dean of the University at Buffalo Law School was indicted this week on federal fraud charges related to the alleged embezzlement of millions of dollars from investors in a company he helped run.

The U.S. Attorney's Office District of Minnesota charged Edward S. Adams, 64, a law professor at the University of Minnesota, with eight counts of mail fraud and six counts of wire fraud.

Adams -- an expert in corporate law and a former associate dean at the University of Minnesota Law School -- was among five finalists for the dean's post at the UB Law School who visited the campus in February and met with law school faculty and top university officials.

A UB spokesman said in an email statement that Adams "was not under consideration when the charges against him were filed."

 

Edward S. Adams

Adams did not return a call seeking comment.

The indictment alleges that over a period of seven years, Adams stole $4.38 million from investors in a company that produced lab-grown diamonds. Adams paid to his own law firm more than $2.54 million during that time, according to the indictment.

UB launched a search for a new dean last September, with a 15-member  committee led by Paul Tesluk, dean of the UB School of Management. The former UB Law School dean, Makau W. Mutua, resigned in 2014. James A. Gardner, a constitutional law expert, has been serving as interim law school dean.

The university hired a national firm, Russell Reynolds Associates, to assist with the search. University administrators are hoping new leadership will help overcome divisions within the Law School and bolster its sagging U.S. News & World Report rankings.

Adams was the first of five finalists to visit campus in February. He followed up his visit with an open letter to UB law faculty saying he looked "forward to receiving an offer to be Dean at UB. I believe I will excel at it. It will be my sole focus."

He also invited them to call him with any questions.

Adams was dropped from consideration for the job prior to the indictment announcement, Tesluk said.

"Just being a finalist is not the last stage in the process. There's further ongoing due diligence that is undertaken. He was not in further consideration at that point," Tesluk said.

Not forthright

Adams had been under investor scrutiny well before the indictment. In 2014, the Minneapolis Star-Tribune reported that disgruntled shareholders in a company called Scio Diamond Technology Corp. alleged in a federal lawsuit and in filings with the Securities and Exchange Commission that Adams had extracted $3.85 million from the company for his brokerage and law firm.

Tesluk said the search committee was aware of the Star-Tribune report. They investigated the matter and found that a judge had dismissed the investor lawsuit with prejudice, meaning the case was over and could not be brought back to court.

The committee was not privy to any pending criminal charges against Adams, Tesluk added.

"Clearly, there was more to this than was possible to be known at the time," he said.

Tesluk said the search firm and committee repeatedly asked candidates to reveal anything that could be cause for concern before advancing their candidacies.

"It's fair to say he was not being forthright in the way we would need and expect," Tesluk said. "Would we be in a different place if we had full knowledge? Of course we would."

But Tesluk said all of the finalists had outstanding qualifications, and the process ultimately worked as it should.

'Brazen theft'

The search committee concluded its work by bringing the five finalists to campus for presentations and question and answer sessions with faculty and staff, as well as smaller group meetings. Their names, along with insights from the committee about each candidate, were then forwarded to Provost Charles F. Zukoski without ranking, Tesluk said.

The other finalists who visited UB were: Aviva Abramovsky, associate dean for international initiatives and special projects and professor of law at Syracuse University; Wayne A. Logan, professor of law in the Florida State University College of Law; Katherine Hunt Federle, professor of law and director of the Center for Interdisciplinary Law & Policy Studies at the Ohio State University Moritz College of Law; and Renee Newman Knake, professor of law & Doherty Chair in Legal Ethics at University of Houston Law College.

Logan withdrew his candidacy for personal reasons after his visit. The on-campus visits were completed Feb. 27.

Adams has a law degree from the University of Chicago and a master's in business administration from the University of Minnesota. He joined the University of Minnesota Law School faculty in 1992. A spokesman for the University of Minnesota said in a statement by email that the university was aware of the U.S. Attorney's Office charges but would not comment further.

"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," said Evan Lapiska, university spokesman.

Adams took a leave of absences from his teaching responsibilities following the indictment.

 

Aside from his academic work, Adams operated a financial services firm, Equity Securities, and also held various management roles with Apollo Diamond Gemstone Corp., a company that produced "lab grown" diamonds through a patented process called chemical vapor deposition.

In 2003, Apollo hired Equity Services to raise $25 million in investment. Adams told investors to purchase shares in Apollo by making checks payable to various bank accounts that he controlled, then spent money for his personal use instead of Apollo operations, according to the indictment.

When Apollo was on the brink of insolvency, Adams convinced shareholders to convert their worthless Apollo stock into stock in a new company, Scio Diamond Technology Corp. The indictment further accused Adams of funneling nearly $2 million in additional investment into bank accounts he controlled.

“The defendant’s brazen theft of millions of dollars of investor’s funds over the course of several years is compounded by the fact that he holds positions of public trust as an attorney and law school faculty member,” said Richard T. Thornton, FBI special agent in charge for the Minneapolis Division.

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