By Victor Skinner | The Center Square contributor
(The Center Square) — A former Louisiana state senator faces up to 20 years in prison and a quarter-million dollar fine for allegedly swindling campaign contributions to fuel her gambling addiction.
The U.S. Attorney’s Office charged former state senator and Democratic Party chairwoman Karen Peterson, 52, with wire fraud on Thursday, alleging she diverted campaign funds for nearly seven years to pay personal and gambling-related expenses.
“Today marks an important step in my life-long recovery as I continue to address my gambling addiction. I sincerely apologize for the impact from my compulsive behavior resulting from this addiction,” Peterson posted to Twitter on Thursday. “I have made full repayment of funds used as a result of my addiction and I will continue to make amends.
“Staying true to the steps of my ongoing recovery, I have been forthright, honest, and fully cooperative with the US Attorneys’ Office in their investigation,” she wrote.
Investigators allege Peterson wrote checks from her Karen Carter Peterson Campaign Fund to friends and associates, then directed them to cash the checks and give most or all of the proceeds to her. Peterson allegedly operated a similar scheme through friendly companies doing business with the state Democratic Party, according to a statement from the U.S. Attorney’s Office.
The scams “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.”
Peterson represented New Orleans in the Legislature for 23 years before she abruptly resigned her post in April.
“It took a long time for me to come to this point to have the courage to really address the issue,” Peterson told her colleagues on her last day, April 8. “But with God’s blessing, I’m sober. I’ve been ‘off the bet,’ as we call it in the Gamblers’ Anonymous program I participate in, for a long time.”
Unnamed sources close to the investigation told NOLA.com Peterson’s alleged fraud involved payments from the Democratic Party to the Jaelyn Group, a political consulting firm owned by Gralen Banks.
Under Peterson’s leadership, the Louisiana Democratic Party wrote checks totaling $327,700 to the company between 2015 and 2019. The Jaelyn Group was one of four companies involved in Peterson’s alleged scheme, according to the news site.
Peterson repaid the party $53,000 on Wednesday, “and party officials said that amount make them whole,” NOLA.com reports.
Peterson’s attorney, Brian Capitelli, told the site she secured a plea deal and is expected to plead guilty before U.S. District Judge Sarah Vance on Aug. 1.
It’s unclear whether others involved in Peterson’s alleged crimes will also be prosecuted.
Dane Ciolino, professor and defense lawyer at Loyola Law School, said that while judges often consider addictions as a mitigating factor for sentencing, Peterson “has a real possibility of doing jail time.”
“This is not something that’s going to end up being a wrist slap for her,” Ciolino told NOLA.com.
Louisiana Democratic Party Chairwoman Katie Bernhardt issued a prepared statement on Thursday highlighting reforms she’s implemented since taking over the post from Peterson two years ago.
“Since September of 2020, we have worked tirelessly to increase transparency and transform operations to turn this into an organization that will stand the test of time. Restitution has been made on behalf of Senator Peterson, which allows us to close that chapter of the Louisiana Democratic Party as we work to restore public trust and move into a more promising future,” Bernhardt said. “We are proud of the progress we have made so far, and we believe we are well on our way to becoming the Democratic Party that Louisiana deserves.”
This story originally appeared in The Center Square