Judy Carroll, 59, of El Cajon, and her husband won the California lottery in 1989. According to court documents, Carroll scammed Lhotak and five other people out of money in part by telling them the IRS had frozen her assets.
Carroll pleaded guilty at the federal courthouse in Rapid City on four counts of wire fraud and one count of tax evasion, the Journal reported.
Carroll was originally charged with 35 counts of wire fraud, but that indictment was dropped as part of her plea deal, the newspaper reported.
Each of Carroll's wire-fraud counts carries a maximum sentence of 20 years in prison, while the tax-evasion charge has a maximum of five years in prison. As part of the plea deal, Carroll must pay $1.55 million in restitution.
Of that total, $622,236.01 must be paid back to Lhotak, who loaned her the money over a 16-year period, the Journal reported.
It was the classic case
"It's been a long time coming, and she deserves punishment for what she did for several victims," Lhotak, who was Carroll's neighbor in California during the mid-1990s and moved to South Dakota in 2002, told the newspaper. "My heart is broken. I have had the worst betrayal of a friendship that anyone can ever experience."
Lhotak loaned Carroll money beginning in November 2000 through October 2016, according to court documents obtained by the Journal.
Carroll told Lhotak the IRS froze all her assets and she owed the agency money, according to court documents. However, the IRS only froze assets and levied Carroll’s accounts once during that time, in 2007-2008, the Journal reported. She also told Lhotak she needed money, falsely claiming he was a victim of identity theft.
Lhotak said she didn't doubt Carroll's stories until she called the IRS in October 2016 to ask if her friend owed tax liens, the Journal reported. When the IRS said it had not, the agency launched an investigation.
"I did it because I loved her with all my heart," Lhotak told the newspaper.