Former advisor committed financial misconduct. How to apply to PhD programs After three years in the workforce, I am planning on returning to school to get my PhD. I currently have a master's degree. Recently, however, there has arisen a complication: my thesis advisor for my master's degree was just discovered to have been embezzling from grant money (double dipping using a fake employee) that was shared between him and two other professors (one at his own institution, one at another institution). His fraud occurred after I was gone from the university. 

Because he was caught embezzling grant money, the entire grant was revoked and the other two professors lost their portions of the money. This represents at least two more years of planned funding that they have now lost through no fault of their own. The professor at the other university (call it University X) was one of my strongest choices for potential advisors if I was accepted to the program at U of X. She likely would recognize my name if I applied to the program at U of X. Because I do not know how she would react to an application from a former student of the professor that just caused her to lose a large grant, I am now hesitant to apply to U of X.

Even if I decide not to apply to U of X, I worry that admissions committees will see my former advisor's name and will black list me. My advisor was at least somewhat well known in the field (22 years of work in the field) and the number of people that are aware of him may be somewhat large.

I would just avoid mentioning my advisor's name if it was not for the fact that I published two papers with him. If I want to entirely cleanse my application of my advisor, I will also have to avoid any mention of these two publications. Not being able to include these publications in my application would obviously weaken my application. My advisor has a rather unique name (not just John Jones or something) and anyone who knows of the situation would immediately be able to connect him to what happened.

Will I still be able to get into PhD programs? Should I attempt to address my advisor's actions in my application? If so, how should I go about doing so?
From what I can deduce, your advisor was involved in financial misconduct, not academic misconduct such as plagarism or using falsified data. This means that the actual integrity of your research has not been compromised (from what I can tell). If this is the case, the papers you have written still stand and offer valid insight into your abilities as a researcher. 

Applying to Univeristy of X

Personally, I would just avoid applying to University X altogether. If you would still like to apply to U of X and you personally know the affected professor, I would actually consider writing an email directly to her. Tell her of your intentions to apply to the graduate program at her school. Ask her what her thoughts would be on you applying.  Tell her that you are considering her as an advisor and then ask her if she has openings for students. This should allow you to gauge her feelings. And the worst that could happen I guess is that University of X rejects you and you are out an application fee. 

Applying to programs in general

As for the field in general knowing of your advisor's misdeeds, it is indeed feasible that other programs will be aware of some portion of the story. This will depend on how large your field is and how well known the university you got your master's degree from is. If you feel that a significant portion of the field would be aware of you advisor's misdeeds, it may not actually be an awful idea to include a short statement in your application acknowledging that, yes, he was your advisor, but that you were in no way involved:


  Because my former advisor was recently implicated in fraudulent use of grant money, I feel that it is important that I provide full disclosure as to my association with him. [Dr. Fraud] misused grant money after he was my advisor and I have no knowledge of any misuse of funds while I was a student of his. I believe that the integrity of my work with him still stands and is a positive reflection of my work in research-level [basket-weaving]. If the admissions committee would like to speak to me further about the situation, I would be happy to do so. 


This acknowledges the issue head-on and does not leave them speculating as to your involvement. It also opens up the possibility of them contacting you directly and allowing you to explain the situation at further length. Admissions committees always prefer full disclosure. They want to know as much as they can about an applicant's situation and portfolio. 

Because most universities will not have any professors who were personally affected by the fraud, I do not think they would really hold against you the fact that your advisor cheated on his use of grant money. If I had an application like yours come across my desk, I would personally hope I would be reasonable enough to understand that you were in no way complicit with your advisor's scheme.  This is all you need to say about the matter. Focus on your credentials and potential, not your advisor's misdeeds. Trying to explain too much will actually make you look guilty. Just be short and up front about what happened, then focus on how you will be an excellent choice for their PhD program because of your research and capabilities. 

One option I would certainly look at for sure is applying to the same university that you got your master's degree from. They will be fully aware of the situation and they will know that you were not involved in any way. It's sort of their mess to clean up. 

Whatever you do, do not have your former advisor write you a letter of recommendation.