A Long Beach tax preparer who embezzled more than $27 million over the span of two decades from clients who believed she was investing their funds in low-risk securities was sentenced Wednesday to eight years and one month in federal prison.
Carol Ann Pedersen, 65, was also ordered by U.S. District Judge Dolly Gee to pay restitution of about $27.5 million to victims and serve three years under supervised release following her prison stint. She was ordered to self-surrender on Oct. 16 to begin serving her sentence.
During an emotional hourlong hearing in Los Angeles federal court, victims told of the impact Pedersen’s scheme had on their lives.
“All these years we didn’t realize we were being groomed — and preyed upon,” said one victim, who told Gee she lost $1.5 million to the investment fraud scheme.
Another victim, who described herself as a 61-year-old freelance TV producer, said Pedersen had seemed like a “big sister” and “protector” before she and her family were fleeced by the former accountant.
Pedersen pleaded guilty in March to a single wire fraud count. In a lengthy statement to the court, the defendant admitted she had “deceived and betrayed” people who had given her “love, trust and friendship,” along with their savings.
“I humbly apologize to everyone I have hurt,” Pedersen said.
Pedersen’s scheme involved dozens of victims and operated for 21 years, from 1996 to 2017. A certified public accountant but not a licensed broker or investment adviser, Pedersen falsely told victims she was investing their funds in low-risk securities with returns available after a specified amount of time, prosecutors said.
One victim, who was not named in court documents, lost at least $12.8 million, while others lost between $85,000 and $6 million, court papers show.
Gee said tPedersen had “preyed upon some of her closest friends,” adding that it had been “gut-wrenching” to hear of the impact the scheme had on victims.
If she hadn’t been stopped, Pedersen “likely would’ve continued her scheme,” the judge said from the bench.
Pedersen 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 they were receiving returns on investments she had made for them, prosecutors said. Victims’ funds were also 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 raked in between $3 million and $5 million for herself — created false documentation, including purported account statements, online virtual portfolios and other records which were sent to victims.
In March, the U.S. Securities and Exchange Commission charged Pedersen with violating various anti-fraud provisions of securities law. Pedersen agreed to the entry of a final judgment in which she consented to injunctive relief and to be liable for $2.7 million, which was covered by the restitution order.
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