LOS ANGELES – A certified public accountant pleaded guilty today to a federal wire fraud charge for running a Ponzi scheme that defrauded her victims, many of whom were clients of her accounting firm, out of tens of millions of dollars over a span of two decades.

Carol Ann Pedersen, 66, of Long Beach, entered her plea before United States District Judge Dolly M. Gee, who scheduled a July 10 sentencing hearing, where Pedersen will face a statutory maximum sentence of 20 years in federal prison.

According to her plea agreement, between 1996 and September 2017, Pedersen executed her scheme by serving as her victims’ unlicensed investment advisor – even though she only was licensed to be a CPA. Through her firm, Carol A. Pedersen, C.P.A., she solicited her accounting clients’ investments through two types of investment opportunities that she offered: “Time Deposit” and “Client Pool,” the plea agreement states. The victims were told that Time Deposit would invest in low-risk securities providing a fixed return on their money after a period of time while Client Pool would invest their money in the stock market through an investment pool Pedersen had established with other investors’ funds, court papers state. During the course of the scheme, Pedersen’s victims invested more than $40 million into these accounts and the total loss to the victims was at least $27,550,720.40, according to court documents.

Pedersen admitted in her plea agreement that after she took her victims’ money, she deposited the funds into her personal accounts, and then used that money to pay her credit card bills, establish trust accounts for her family, and purchase real estate. In an effort to avoid detection and in the classic hallmark of a Ponzi scheme, Pedersen used some of her victims’ money to make distribution payments to her other victims, and she falsely represented the payments as returns on their investments. Pedersen also admitted to avoiding detection by creating fraudulent documents, including false account statements and an online “virtual portfolio” that she falsely represented enabled her victims to track their investments’ progress, court papers state.

For example, on July 30, 2015, Pedersen wired $3 million from a purported “Client Pool” account to a personal account that she controlled, the plea agreement states.

This matter was investigated by the Federal Bureau of Investigation and the Los Angeles County Sheriff’s Department. The Securities and Exchange Commission today filed a civil complaint against Pedersen in connection with the fraudulent scheme.

This case is being prosecuted by Assistant United States Attorneys Julian Andre and Alexander Wyman of the Major Frauds Section.