Lori Loughlin did not want to accept a plea deal that resulted in jail time, the source says

Lori Loughlin Rejected Plea Deal Before New Charges, Says Source: 'Not Seeing How Serious This Is'

In the weeks since Felicity Huffman and Lori Loughlin were named in the high-profile college admissions cheating scandal, they have been working with their legal teams to determine what their next move should be.

Huffman agreed to plead guilty on Monday, saying, “I am in full acceptance of my guilt, and with deep regret and shame over what I have done, I accept full responsibility for my actions and will accept the consequences that stem from those actions.”

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But Loughlin and her husband, fashion designer J. Mossimo Giannulli, have not entered pleas — and a source close to them tells PEOPLE that they have resisted any agreements that would result in jail time. Under federal guidelines, both of them would have gotten between 18-24 months in jail under a plea agreement.

“They weren’t ready to accept that,” says the source, who is familiar with the legal discussions in the case. “They’re really not seeing how serious this is.”

On Tuesday, things got worse for Loughlin and Giannulli, who were each hit with money laundering charges. They now face up to 20 years in prison for each charge.

Image zoom Steven Senne/AP/REX/Shutterstock

“They were offered the carrot and the stick,” the source tells PEOPLE. “The carrot was that this can all go away and you can serve your time and put it behind you. Remember, they were facing 20 years, even before the latest charges. The stick was that [the prosecution] would and could pile on more serious charges.”

On March 12, the U.S. Attorney’s Office in Massachusetts announced the initial charges against 50 people, including Loughlin.

Image zoom Lori Loughlin Donato Sardella/Getty Images for LACMA

Loughlin, 54, allegedly gave $500,000 to have her daughters, Olivia Jade and Isabella Rose, designated crew team recruits for USC, even though they had never rowed, the indictment alleges.

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Prosecutors alleged in the original criminal complaint against the couple that Loughlin paid $500,000 to admissions consultant William “Rick” Singer and his nonprofit organization, Key Worldwide Foundation (“KWF”), which prosecutors said was actually a front for accepting bribes. Singer has since admitted his role as the ringleader of the scam and has pleaded guilty to multiple charges.

As things continue to tighten, Loughlin and Giannulli are now trying to figure out their next move, the source tells PEOPLE.

“They decided to roll the dice,” the source says, “and it may have been a bad gamble. Now they’re in worse shape than before.”