Long Beach accountant to plead guilty in $40 million Ponzi scheme
A Long Beach tax preparer is expected to plead guilty Wednesday in federal court to wire fraud in connection with a Ponzi scheme that allegedly bilked $40 million from investors, according to authorities.
As part of a plea deal, prosecutors have recommended that Carol Ann Pedersen receive 6 1/2 to eight years in federal prison when she is sentenced in U.S. District Court in Los Angeles, Thom Mrozek, a spokesman for the U.S. Attorney’s Office, said Monday.
The agreement also calls for Pedersen, who netted about $3 million to $5 million from her alleged scheme, to pay $27.5 million in restitution. Court documents indicate Pederson has cooperated with an investigation by the U.S. Attorney’s Office and FBI.
According to a criminal complaint, Pedersen allegedly defrauded more than 50 people from 1996 to 2017, with one victim losing at least $12.8 million. She used the victims’ investments for personal expenses, including credit card bills, trust accounts for her family and to purchase real estate, according to prosecutors.
Pedersen, a certified public accountant, persuaded victims to entrust her with their funds even though she was not a licensed broker or investment adviser, prosecutors allege.
“Many of the defendant’s victims were initially clients of the defendant’s accounting firm, and defendant used this special skill and her position as the victim’s CPA to facilitate her fraud,” said the criminal complaint.
According to court records, Pedersen presented victims with two types of investment opportunities — the “time deposit” and the “client pool.”
Under the time deposit option, Pedersen allegedly told victims she would invest their funds in low-risk securities, providing them with a fixed-return after a specific period of time, prosecutors said. Victims who chose the client pool option were informed their funds would be invested in various securities with specified maturity dates.
“Once the investments reached these maturity dates, defendant promised the victims that their funds would, at their choice, be either reinvested in other securities or deposited into a money market account,” according to the criminal complaint.
“Defendant would not invest the funds as promised, but would instead deposit the victims’ funds into accounts that she controlled,” the complaint says.
Prosecutors also allege Peterson concealed that she was using her investors’ funds to pay off other victims to maintain the Ponzi scheme.
When Pederson needed additional funds to honor distribution requests made by victims, she fraudulently marketed new investment opportunities and created fraudulent account statements to make the scheme appear legitimate, according to the complaint.
“Pederson created and maintained an online virtual portfolio for the victims that she falsely represented enabled the victims to track the progress of their purported investments,” the complaint says. “Defendant also periodically sent the victims false earning statements.”
Attempts to reach Pederson and her attorney Monday were unsuccessful.