RAPID CITY, S.D. — A Montana woman and "master manipulator" created financial and emotional havoc for her friends by stealing more than $1 million from them over a 25-year period, according to victims, a prosecutor and a judge.
Judy Lynn Carroll heard about the impact she had on friends and family during a sentencing hearing Thursday, June 6, at the Rapid City federal court, but she will have to wait to learn about her punishment.
Judge Jeffrey Viken ended up continuing the hearing, saying he's considering overruling the federal sentencing guidelines so he can send Carroll to prison longer than recommended.
Carroll conducted a "highly sophisticated," long-term scam, Viken said. Unlike violent crimes that are often based on an impulsive decision, he said, Carroll carefully planned her crime and manipulated multiple victims, leading some to bankruptcy.
The guidelines suggest that Carroll be sentenced to 3.8-4.75 years in prison after she pleaded guilty to four counts of wire fraud and one count of tax evasion. She was originally charged with 35 counts of wire fraud.
Viken is considering the upward departure despite prosecutor Ben Patterson and defense lawyer Jennifer Albertson both asking for a sentence within the guidelines.
In addition to facing prison time, Carroll will have to pay $1.55 million in restitution, according to her plea deal. $622,236 is for Kelly Lhotak, her former best friend who lives in the Rapid City area after the two met in California, and $618,000 is for five other friends she scammed from 2000-2016. $310,078, will be paid to the IRS and represents tax loss from Carroll's unreported gross income.
Carroll scammed her friends by telling them she needed to borrow money to deal with IRS issues and identity theft despite winning more than $5 million in the California lottery, according to the factual basis document she signed. But her financial problems were made up and she never paid back her friends.
Albertson called the case one of the most complicated she's seen in terms of "human emotion" and admitted it's difficult to "unravel" how Carroll was able to take so much money from her friends. But she said her client isn't a "diabolic, evil fraudster" but someone who fell in love with money and gambling. She asked for a sentence that would allow Carroll to work toward paying her restitution.
Being addicted to gambling is "like being a drug addict," Carroll said when Viken asked why she didn't ask for help. She said she was "ashamed" and didn't admit that she was addicted until recently.
"For 25 years she's been preying on people," so she should serve 25 years in prison, Lhotak's ex-husband said of Carroll. He said Carroll was in court not because she got caught by the government or realized she was doing something wrong, but because Lhotak realized she was being scammed and reported it to the IRS.
"This is maybe one of the best schemes I've seen," Patterson said, calling Carroll a thief, liar and "master manipulator" who took "extreme measures" to convince her friends she needed money.
Those measures included Carroll having an accountant and lawyer sign documents so Lhotak would believe she was truly having IRS issues but would soon be able to pay back the money, Patterson said.
He said Carroll caused her friends to stop medical treatment, develop trust issues, and lose their vehicles and retirement savings.
Viken read a letter from Lhotak that said after she met Carroll in 1994, the pair soon became best friends who spoke every day. Lhotak wrote that Carroll asked for money while her father was dying from brain cancer, would say she needed money to feed her family while she was really dining out at steakhouses, and created stress for her children and ended her marriage.
The judge also read a letter from Lhotak's mother, a 90-year-old woman who lives in a retirement home. She wrote that she felt like she got kicked in the face and stomach after learning of Carroll's "treachery" and remembers Carroll promising to take her and her late husband on cruises and pay for their long-term medical care.