Will Victims of a Ponzi Scheme Now Pay for a Diversity Scheme?

A federal judge in Mississippi uses a fraud case as a vehicle for his social agenda.

Arthur Lamar Adams leaves federal court in Jackson, Mississippi on May 9 after pleading guilty to one count of wire fraud. Photo: Jeff Amy/Associated Press
By James Freeman
June 5, 2018 12:29 p.m. ET


On Friday in Mississippi, federal District Judge Carlton Reeves surprised government lawyers by ordering that the appointment of a receiver to recover assets for fraud victims should serve as a vehicle to promote diversity in the legal profession.
“It is indisputable that systematic oppression lies behind much of the judiciary’s lack of diversity,” wrote the Obama appointee in his order establishing a process to select a receiver to go after the money taken from investors. Judge Reeves added that “when given the opportunity, courts should take steps to increase their diversity. Justice is a search for truth. That search will fail if a court does not incorporate a wide array of experiences, facts, and perspectives into its decisionmaking processes.”
As far as this column can tell, the case itself doesn’t have anything to do with racial or sexual discrimination. And while defrauded investors surely value the search for truth, they are also no doubt eager for a receiver to begin an immediate search for their money.
Last month Jackson, Mississippi’s Clarion Ledger newspaper reported that there are unfortunately many such victims:
Arthur Lamar Adams has only a high school education but devised a sophisticated Ponzi scheme that attracted at least 300 wealthy investors to pour in more than $100 million into the scheme, a prosecutor said in court…

On Wednesday, Adams, 58, pleaded guilty in federal court in Jackson to one count of wire fraud in a plea agreement. He is charged with two counts of wire fraud and one count of bank fraud, carrying a maximum combined sentence of 70 years in prison if convicted.
Assistant U.S. Attorney David Fulcher said Adams confessed to the FBI and admitted his company was a Ponzi scheme.
With the plea deal, Adams now faces a maximum 20 years in prison on the wire fraud conviction. Sentencing is set for Aug. 21.
The defendant seems to have been at least as eager to defraud other white men as he was to victimize people in any other demographic category. The Clarion Ledger previously noted that among the victims was the state’s Republican U.S. Sen. Roger Wicker. The Clarion Ledger reported:

“My wife and I are victims of this apparent fraud,” Wicker said in a statement late Thursday. “Like many others who stand to lose money in this scheme, we are very surprised and disappointed. We are learning of this through news reports like everyone else. We are seeking answers as to how this happened and will continue to monitor this matter closely.”
The judge’s order doesn’t claim that his diversity campaign has anything to do with the particulars of the fraud case before him, but rather is a compelling issue for the legal system generally. “To deliver justice and ensure its legitimacy, then, the judiciary must diversify itself,” writes Judge Reeves.
He then lays out the conditions for anyone seeking to serve the defrauded investors:

The Court will require the Receiver to take steps to guarantee that its hiring practices are as inclusive as possible, ensuring the participation of those who have traditionally been excluded from legal work in America. Applicants are encouraged to commit to bold and creative steps involving recruiting, retaining, hiring, and other staffing concerns in their applications. Through their fulfillment, those steps may aim for – though may not guarantee achievement of – targets for billable hours performed by those underrepresented in the legal profession. Even steps that aim for very modest targets, such as 25% of hours being conducted by women and 20% of hours being conducted by people of color, would be laudable.
The Court is looking for a candidate who has the proper professional experience, business acumen, communication skills, ability to manage conflicts of interest, and commitment to inclusion. In sum, the Receiver must be deeply qualified to do justice and identify, collect, and protect all property subject to the receivership and minimize dissipation of estate assets.
Whatever one thinks about government programs intended to increase diversity, is there an argument that the burden of advancing such efforts should fall on the victims of a Ponzi scheme—right at the moment they are trying to recover their stolen nest eggs?

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