Former Louisiana State Senator and Chair of a State Political Party Faces up to 20 Years in Prison After Pleading Guilty to Role in Nearly 7-Year Fraud Scheme

New Orleans, Louisiana – On August 1, 2022, 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 records, Peterson was a Louisiana State Senator for the 5th District from approximately 2010 until approximately April 8, 2022, and the Chair of State Political Party A between approximately 2012 and 2020. As a Louisiana State Senator, Peterson established and ran the “Karen Carter Peterson Campaign Fund (“KCPCF”)” to collect and raise campaign donations from individual and corporate donors. The campaign contributions were raised based on statements and the premise that the monies would be utilized to help Peterson re-election to the seat of State Senator. Peterson failed to disclose to potential contributors that she had previously used prior contributions for her personal profit when requesting campaign funds.

For nearly seven years, Peterson diverted and caused her friends and colleagues to redirect campaign funds from the KCPCF to Peterson’s personal use for the purpose of gaining and using money and property from KCPCF supporters through materially false and fraudulent statements and promises. She accomplished this by issuing checks drawn on the KCPCF account to her friends and acquaintances, instructing them to redeem the checks at financial institutions in the New Orleans, Louisiana area, and then giving the money to Peterson. She occasionally permitted the people cashing the checks to keep a small amount of the money.

Peterson used the cash for personal expenses unrelated to her campaign or public office, including gambling-related expenses. Furthermore, Peterson induced the public submission of false and deceptive campaign finance reports that mischaracterized expenditures as being for a lawful campaign or public office objectives when they were, in fact, unrelated to such reasons and were diverted to Peterson’s personal use. Between about November 25, 2013, and March 5, 2020, Peterson fraudulently diverted and converted to her personal use approximately $94,250 donated by campaign contributors.

In her capacity as Chair of State Political Party A, Peterson controlled Party A’s strategic decision-making, operations, outreach, and direction, as well as its permanent staff, including those with signing authority over State Political Party A’s bank accounts. Peterson used her position to select organizations (” Companies”) run by her allies, ostensibly to offer campaign-related services to State Political Party A, and to determine how much Party A would pay each of the Companies.

Peterson told State Political Party A that the payments were for a campaign. In reality, the Companies offered no or limited services to State Political Party A. Peterson then authorized the Companies to pay a portion of the funds given to them by State Political Party A to Peterson via checks drawn on the Companies’ accounts or in cash. Between approximately October 7, 2019, and April 4, 2020, Peterson collected about $53,106.93 from State Political Party A via this fraudulent scam.

Peterson faces a potential sentence of twenty years in prison, a fine of up to $250,000.00, three years of supervised release after incarceration, and a mandatory $100 special assessment charge. The sentencing hearing before Judge Vance has been set 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.”

In this case, the United States Attorney’s Office applauded the work of the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, and Forensic Accountant Josephine M. Beninati, CPA, CFE, as well as the Metropolitan Crime Commission. The prosecution is led by Assistant United States Attorneys Jordan Ginsberg, Chief of the Public Corruption Unit, and Jonathan L. Shih.