The actress “didn’t see [her alleged actions] as being a legal violation,” says the insider
“It’s just taking some time for it to sink in that what she was allegedly doing could be considered illegal,” says the source. “To her, it wasn’t egregious behavior. Was it entitled and perhaps selfish? Perhaps. But she didn’t see it as being a legal violation.”
“From the beginning, she didn’t want to take a deal, because she felt that she hadn’t done anything that any mom wouldn’t have done, if they had the means to do so,” the source continues. “So this wasn’t her being obstinate; this was her truly not understanding the seriousness of the allegations.”
On March 12, the U.S. Attorney’s Office in Massachusetts announced it had charged 50 people, including Loughlin and fellow actress Felicity Huffman, in the cheating scandal. The two actresses, along with coaches, admissions counselors, parents and Loughlin’s husband, fashion designer J. Mossimo Giannulli, were accused of such alleged crimes as falsifying SAT scores and lying about the athletic skills of their children.
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According to prosecutors, Loughlin allegedly wanted her daughters to get into the University of Southern California so badly that she and Giannulli paid approximately $500,000 in bribes to falsely designate their daughters as recruits to the USC crew team — despite the fact that they did not participate in crew.
Huffman has agreed to plead guilty to one count of conspiracy to commit mail fraud and honest services mail fraud.
But Loughlin, who faces the same charge along with her husband, has not yet admitted to any guilt — and things got worse for her on Tuesday, when she and Giannulli were among 16 parents indicted on an additional felony charge of money laundering conspiracy.
Now things are beginning to sink in for the actress, the source says. “She’s trying to decide what is the best move for her,” says the source. “She has no desire to prolong this for anyone, but she still believes that she deserves a fair outcome.”
“Obviously, the deal, if any, will be different than if she had taken a deal a week ago [before the latest charge],” the source continues. “She’s a smart woman and she realizes that. But she is amenable to discussing how to put this behind everyone now. She’s ready for this to go away.”
Reps for Loughlin and Giannulli have not returned PEOPLE’s calls for comment.
“You read the complaint and they look like criminal masterminds,” the source tells PEOPLE. “But they really didn’t know the legalities of what was going on. They’re not lawyers and they’re not experts. They were parents who simply wanted to make sure that their daughters got into a good school.”
The source tells PEOPLE that Loughlin and Giannulli truly believed that their actions were comparable to those of other parents who take extraordinary steps to help their their children get into upper-tier colleges.
“Calling in favors, donating money to the alumni association, hiring consultants. Those are all things that parents do,” says the source. “And so they gave money to this consultant, not entirely knowing everything that was going to be done. When it all fell apart, nobody was as surprised as they were that they were in trouble.”
The source continues, “She never intended to break any laws, and if she did, it was inadvertent.”
Consider the lockdown period a thing of the past.
What started as a smattering of sightings—a trip to her regular yoga haunt, an errand to get her car washed in West Hollywood—has become an official coming out party: Lori Loughlin is done with hiding.
While holing up in the six-bedroom Bel-Air mansion she shares with husband Mossimo Giannulli felt right in the initial days after March 12, when they were both charged with conspiracy to commit mail fraud and honest services mail for their alleged role in the aptly named Varsity Blues college admissions scandal, now it’s time to get on with things.
Because there she was, mere hours after her potential prison sentence was parodied on Saturday Night Live last weekend, turning up to Palm Sunday mass at The Church of the Good Shepherd in Beverly Hills, Calif. with Giannulli. Casual in slacks and tops, save for their matching Gucci loafers, the couple of two-plus decades walked out in seemingly good spirits, palm branch in hand, looking like any standard duo preparing for the holiday ahead.
But what happened next wasn’t the result of divine intervention.
On Monday she and Giannulli, currently out on $1 million bond, gave their official response to the U.S. District Attorney’s Office, pleading not guilty to the original charges, plus the counts of conspiring to commit fraud and money laundering that were handed down in a second superseding indictmentlast week.
Their decision came as a surprise to scores of legal analysts, none of whom are representing the pair but who have all weighed in with recommendations to take a plea deal. But an insider tells E! News the 54-year-old Fuller House actress, accused of paying some $500,000 in bribes to get daughters Isabella Rose Giannulli, 20, and Olivia Jade Giannulli, 19, into the prestigious University of Southern California by falsely claiming they were crew team recruits, according to an FBI affidavit, isn’t entirely convinced she’s in the wrong.
“Lori really believes she isn’t guilty and that any parent would have done the same thing that she did if they were in that position,” says the insider. With the nationwide scandal, involving such institutions as Georgetown, Stanford and Yale, calling into question other dubious college admissions tactics such as taking advantage of legacy status and gifting sizable donations to universities for favorable placement, “She doesn’t think that what she did is a criminal act or that she should go to jail,” continues the source. “She plans to fight this and won’t give in.”
Another insider says the New York native, who tried her hand at modeling before landing her first gig on soap opera The Edge of Night as a teen, isn’t so much being stubborn as she is naive to the seriousness of her actions. “She doesn’t think they are cheaters,” says the insider. “They just don’t see it that way.” At this point she feels she doesn’t have much of a choice but to double down.
When Felicity Huffman and 12 other parents included in the indictment were entering guilty pleas, she and Giannulli were digging in their heels. “She has been in complete denial and thought maybe she could skate by,” a source told E! News. “She refused to accept any jail time and thought the DA was bluffing. She was adamant she wouldn’t do any jail time.”
By the time she realized this was no false bluster, perhaps right around when the second set of charges were handed down, it was too late to backtrack.
“I think she and her lawyers underestimated how motivated the prosecution was. So she didn’t plead, and then they hit her with another charge,” a confidante recently told People. “Now she’s willing to negotiate, but the prosecution says that the deal is off the table. So the only choice they’ve got is to plead not guilty. That’s all they can do.”
Now facing a potential jail sentence of up to 40 years, the source admits to E! News that the case hasn’t been handled in the most ideal of ways: “The whole situation has gone from a big mess to catastrophic.”
Piling on to the discomfort: Even Loughlin and her fashion brand-creating husband aren’t seeing eye-to-eye on how to move forward.
With some four decades of Hollywood experience under her belt, the Hallmark Channel regular is dealing with the attention the only way she knows how, acknowledging the trail of photographers that have been documenting her moves about town and even signing autographs for the fans who gathered to watch her enter a Boston federal courthouse Apr. 3.
“She was obviously extremely nervous and the actress side of Lori came out. She doesn’t know how else to be in public,” a friend explained. “Her natural reaction was to just smile and try to be light-hearted. She’s always been so well loved and charming, that’s the part she knows how to play in public.”
But Giannulli would prefer to return to a time when his multi-billion dollar Mossimo clothing brand, which once lined the shelves at Target, was far more well-known than his now-famous face. An insider told E! News he quietly booked a private jet for their April court appearance in the hopes it would help them fly under the radar: “He is mortified by this whole thing and wants to avoid unwanted attention in public.”
So the pair, once so in sync they decided on a whim to elope just two days before Thanksgiving in 1997, are now in near total disagreement. “There’s a rift between Lori and Mossimo,” the source tells E! News. “He is completely mortified and she is putting on a happy face and acting like everything will be OK.”
Aside from getting on the same page for their not guilty pleas, “They are blaming each other and disagreeing on things,” continues the source. “They are starting to turn on each other and there is incredible stress and tension.”
Ultimately, says an insider, the married duo will deal with this hardship as they have any others that have popped up over the course of their two-decade marriage. While the insider admits that the situation is akin to “their worst nightmare that they can’t wake up from,” and that it’s been “incredibly stressful and trying on their marriage,” they’ve been grasping for any shred of positivity they can find.
“There have been dark and tense moments,” says the insider. “But they know that their backs are up against the wall and they are hoping to get through this together.”
Still, they could be in for more hard times ahead. Though Loughlin is surrounded by a slew of vocal supporters, with everyone from her Full House familyto Paul Greene, her costar on her former Hallmark show, When Calls the Heart, speaking out on her behalf, hers isn’t a case that will be tried in the court of public opinion.
A source told People that prosecutors, feeling confident in their rock-solid case, are “saying that the only way anyone’s going to escape jail time is if they go to trial and are found not guilty. But they’re saying that they have such meticulous evidence that it would be foolish to take that risk.”
For Loughlin, though, it’s a gamble worth taking. Having considered how the optics of a guilty plea, not to mention the accompanying jail sentence would affect her daughters, she’s up to the challenge of moving forward.
Both Bella and Olivia have already had their entire worlds upturned, with neither planning to USC’s palm-tree lined campus and Olivia watching as the influencer empire she built up over years of diligently posting to YouTube comes crumbling down.
“She is very distraught and is in crisis mode,” a source tells E! News. “Olivia is more embarrassed than anything and doesn’t know how to handle all of the stress and scrutiny that has been surrounding her and her family. She feels completely lost. Her and Lori are leaning on each other a lot for full support right now.”
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Which explains Loughlin’s current mama bear mindset. The insider says her main goal is to “protect the girls first and foremost. “They do not want them to have to testify. It would be terrifying and humiliating. They will do what they can to avoid that at all costs.”
And while friends say the actress is far more focused on how the whole spectacle is affecting her daughters than the negative impact on herself, she does fear what will happen if a prison sentence is handed down.
“She can’t imagine what will happen to them if she goes to jail,” says a source noting she’s willing to do whatever it takes to avoid that fate. “She’s rolling the dice and thinks that she has a strong defense,” says the source. “She really feels she has no choice but to fight.”