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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Louisiana

FOR IMMEDIATE RELEASE
Monday, August 1, 2022

Former Louisiana State Senator and Chair of a State Political Party Pleads Guilty for Role in Nearly Seven-Year Scheme to Defraud Campaign Entity, Donors, And Political Party Organization

NEW ORLEANS –  The  United States  Attorney’s Office  announced that former Louisiana State Senator and Chair of State Political Party “A”, KAREN CARTER PETERSON, age 52, from New Orleans, Louisiana, pleaded guilty as charged today before United States District Judge Sarah S. Vance to a one-count bill of information charging her with wire fraud, in violation of Title 18, United States Code, Sections 1343 and 2. 

According to court documents, PETERSON served as a Louisiana State Senator for the 5th District from about 2010 until about April 8, 2022, and as the Chair of State Political Party A between about 2012 and 2020.  As a Louisiana State Senator, PETERSON formed and maintained a campaign organization, the “Karen Carter Peterson Campaign Fund (“KCPCF”),” to solicit and raise campaign funds from individual and corporate donors.  The campaign funds were solicited based upon the representations and premise that the funds would be used to facilitate PETERSON’S reelection for the position of State Senator. In the course of soliciting campaign donations, PETERSON failed to disclose to potential contributors that she had already used prior contributions for her personal benefit.

In furtherance of her scheme,  PETERSON diverted, and caused her friends and associates to divert, campaign funds from the KCPCF to PETERSON’S personal use for the purpose of obtaining and using money and property from contributors to the KCPCF by means of materially false and fraudulent representations and promises for nearly seven (7) years.  She did so by writing checks drawn on the KCPCF account to her friends and associates and directing them to cash the checks at financial institutions in the New Orleans, Louisiana area and then to give PETERSON the proceeds.  Occasionally she allowed the individuals cashing the checks to keep a small portion of the proceeds.  PETERSON used the funds to pay for personal expenses unrelated to her campaign or the holding of public office, including to pay gambling-related expenses.  Further, PETERSON caused the public filing of false and misleading campaign finance reports that mischaracterized expenditures as being for legitimate purposes related to her campaign or the holding of public office, but were, in fact, unrelated to  such purposes and, instead, were diverted to PETERSON’S personal use. In total, between about November 25, 2013, and March 5, 2020, PETERSON fraudulently employed the scheme to divert and convert to her personal use approximately $94,250 that had been donated by contributors to her campaign.

Additionally, in her role as Chair of State Political Party A, PETERSON oversaw the strategic decision-making, operations, outreach, and direction of  Party A and supervised its permanent staff, including individuals who had signatory authority of State Political Party A’s financial accounts.  PETERSON exploited her position to choose entities (“ Companies”) operated by her associates, purportedly to provide campaign-related services to State Political Party A, and to determine the amount that Party A would pay each of the Companies.  PETERSON represented to State Political Party A that the payments were for a campaign purpose.  In reality, the Companies provided either no or minimal services for  State Political Party A.  PETERSON then willfully and wrongfully directed the Companies to remit a portion of the funds paid to them by State Political Party A to PETERSON through either checks drawn on the accounts of the Companies or in cash.  In total, between about October 7, 2019, and April 4, 2020, PETERSON received approximately $53,106.93 of funds from State Political Party A through this fraudulent scheme.

PETERSON faces a maximum term of twenty (20) years in prison, a fine of up to $250,000.00, up to three (3) years of supervised release after imprisonment, and a mandatory $100 special assessment fee.  Sentencing before Judge Vance has been scheduled for December 7, 2022.

The United States Attorney’s Office stated, “Since public trust is essential for a healthy, functioning government, it is likewise essential that any breaches of this trust  be  vigorously investigated and prosecuted. Our office will continue to assure the public of our unwavering commitment to identify and prosecute anyone who engages in public corruption.”

“Candidates for public office must be held to the highest standards of conduct, especially when they seek funds from the public for their campaigns. Today’s guilty plea sends a clear message to elected officials like former Louisiana State Senator Karen Carter Peterson that those who misuse campaign contributions and steal money from a political party organization for personal gain, will be held accountable,” said FBI New Orleans Special Agent in Charge Douglas A. Williams, Jr.  “We thank our partners at the United States Attorney’s Office Eastern District of Louisiana, Internal Revenue Service – Criminal Investigation, and Metropolitan Crime Commission for their strong partnerships in helping the FBI disrupt public corruption in Louisiana." 

The United States Attorney’s Office  praised the work of the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, and Forensic Accountant Josephine M. Beninati, CPA, CFE in this matter and thanks the Metropolitan Crime Commission for its assistance.  Assistant United States Attorneys Jordan Ginsberg, Chief of the Public Corruption Unit, and Jonathan L. Shih are in charge of the prosecution.

 

Updated August 1, 2022