A Long Beach tax preparer is expected to plead guilty Wednesday to embezzling over $40 million from clients who believed she was investing their funds in low-risk securities.

Carol Ann Pedersen, 65, will enter a guilty plea before U.S. District Judge Dolly M. Gee to a single wire fraud count, which carries a possible federal prison sentence of up to 20 years, according to the U.S. Attorney’s Office.

However, because of her “extraordinary efforts” to accept responsibility at the start of the investigation in Sept. 2017 and full cooperation with authorities, she could receive far less time behind bars, prosecutors indicated in papers filed in Los Angeles federal court.

Prosecutors contend that Pedersen’s scheme involved more than 50 victims and operated from 1996 to 2017. Pedersen, who was a certified public accountant but not a licensed broker or investment advisor, falsely told victims that she was investing their funds in low-risk securities with returns available after a specified amount of time, prosecutors allege.

The U.S. Attorney’s Office said that one victim, who was not named in court documents, lost at least $12.8 million.

Pedersen allegedly used some of the victims’ money to make distribution payments to others in order to keep the Ponzi scheme running, falsely telling so-called clients that they were receiving returns on investments she had made for them.

Victims’ funds were also allegedly used by Pedersen to pay her credit card bills, establish trust accounts for family members and to purchase real estate, according to prosecutors.

As part of the scheme, Pedersen — who allegedly raked in between $3 and $5 million for herself — created false documentation, including purported account statements and other records which were sent to victims, prosecutors allege.

As part of her plea agreement, Pedersen is expected to be ordered to pay restitution of about $27.5 million when she is sentenced. A sentencing date will be set by the judge after Pedersen pleads guilty.

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