NEW ORLEANS – The United States Attorney’s Office announced that the former Louisiana state senator and chairman of the “A” state political party, KAREN CARTER PETERSON, 52, of New Orleans, Louisiana, pleaded guilty today before United States District Judge Sarah S. Vance to a one-count information bill charging him with wire fraud, violating title 18, United States Code, Sections 1343 and 2.
According to court documents, PETERSON served as Louisiana State Senator for the 5th District from approximately 2010 until approximately April 8, 2022, and Chairman of State Political Party A between approximately 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. Campaign funds were solicited based on representations and the premise that the funds would be used to facilitate FROM PETERSON re-election as a state senator. As part of the solicitation of donations for the campaign, PETERSON failed to disclose to potential contributors that she had ever used past contributions for personal benefit.
As part of his project, PETERSON embezzled and caused his friends and associates to embezzle KCPCF campaign funds to FROM PETERSON personal use for the purpose of obtaining and using money and property of KCPCF contributors through materially false and fraudulent representations and promises for nearly seven (7) years. She did this by writing checks drawn on the KCPCF account to her friends and associates and asking them to cash the checks at financial institutions in the New Orleans, Louisiana area and then give PETERSON the product. On occasion, it allowed people who cashed the checks to keep a small portion of the proceeds. PETERSON used the funds to pay for personal expenses unrelated to his campaign or the performance of public office, including paying for gambling-related expenses. Further, PETERSON caused the public filing of false and misleading campaign finance reports that falsely characterized expenditures as being for legitimate purposes related to his campaign or the performance of a public duty, but were in fact unrelated for these purposes and, instead, were diverted to FROM PETERSON personal use. In total, between approximately November 25, 2013 and March 5, 2020, PETERSON fraudulently used the scheme to divert and convert to his personal use approximately $94,250 that had been donated by contributors to his campaign.
In addition, in her role as chairwoman of State A’s political party, PETERSON oversaw Party A’s strategic decision-making, operations, outreach, and leadership and oversaw its permanent staff, including individuals who had signing authority over the financial accounts of State Political Party A. PETERSON exploited his position to select entities (“corporations”) operated by his associates, allegedly to provide campaign-related services to State Political Party A, and to determine the amount Party A would pay each of the corporations. PETERSON told the political party in State A that the payments were for an election campaign. In reality, the companies provided no or minimal services to State A’s political party. PETERSON then deliberately and wrongly ordered the companies to return part of the funds paid to them by the political party in State A to PETERSON by checks drawn on the accounts of the Companies or in cash. In total, between around October 7, 2019 and April 4, 2020, PETERSON received approximately $53,106.93 in State A political party funds through this fraudulent scheme.
PETERSON faces a maximum penalty of twenty (20) years in prison, a fine of up to $250,000.00, up to three (3) years of supervised release from imprisonment and a mandatory special assessment fee of $100. Sentencing before Judge Vance is scheduled for December 7, 2022.
The United States Attorney’s Office said, “Because public trust is essential to a healthy and functioning government, it is also essential that any breach of that trust be vigorously investigated and prosecuted. . Our office will continue to assure the public of our unwavering commitment to identifying and prosecuting anyone who engages in public corruption.
“Candidates for public office must be held to the highest standards of conduct, particularly when seeking 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 for personal gain will be held accountable,” said the FBI Special Agent in Charge in New Orleans. Douglas A. Williams, Jr. “We thank our partners at the United States Attorney’s Office for the Eastern District of Louisiana, the Internal Revenue Service – Criminal Investigation, and the Metropolitan Crime Commission for their strong partnerships in assisting the FBI to disrupt public corruption in Louisiana.”
The United States Attorney’s Office commends the work of the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, and Forensic Accountant Josephine M. Beninati, CPA, CFE in this case and thanks the Metropolitan Crime Commission for its assistance. Assistant United States Attorneys Jordan Ginsberg, head of the Public Corruption Unit, and Jonathan L. Shih are in charge of the prosecution.