Lori Loughlin Is 'About to Break' in the Wake of Additional Federal Charges: Source

"She just wanted what was best for her daughters. And it has turned into an ongoing nightmare," a Lori Loughlin source tells PEOPLE

Since the day Lori Loughlin and her husband, fashion designer Mossimo Giannulli, were indicted in the massive college admissions scandal, the couple has been doing their best to keep their lives as normal as possible.

But as they await their next court date, which is set for Jan. 17, what was supposed to be a quiet lull in the legal storm quickly turned to panic on Oct. 22, when the prosecution surprised them with a third federal charge.

“The entire family is in chaos right now,” a Loughlin source tells PEOPLE. “They knew this was a possibility, but they thought perhaps it was just a bargaining tool from the prosecution. Now that the charges are official, they are realizing that there is no way to avoid a moderately long prison sentence, unless they are found not guilty in a trial.”

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The U.S. Department of Justice said in a press release that Loughlin, 55, Giannulli, 56, and nine other defendants “conspired to commit federal program bribery by bribing employees of the University of Southern California (USC) to facilitate their children’s admission.” They have been charged with one count each of conspiracy to commit federal programs bribery.

Prior to the new charges, Loughlin and Giannulli both already faced charges of money laundering conspiracy, conspiracy to commit mail and wire fraud and honest services mail and wire fraud. They previously faced up to 40 years in prison and have pleaded not guilty to the charges.

“They feel like this is David versus Goliath,” says the source. “How do you go up against the federal government when the government has decided to make an example out of you? This stress is about to break them.”

Lori and Mossimo
John Tlumacki/The Boston Globe/Getty

On March 12, the U.S. attorney’s office in Massachusetts indicted Loughlin and Giannulli in the shocking nationwide scam as part of an investigation dubbed Operation Varsity Blues. Nearly 50 other parents, coaches, exam proctors and admissions counselors are accused of actions such as paying for boosted SAT scores and lying about students’ athletic skills in order to gain them acceptance to elite colleges including Yale, Georgetown, USC and Stanford.

Loughlin and Giannulli allegedly paid $500,000 to admissions consultant William Singer to falsely designate daughters Olivia Jade Giannulli, 20, and Isabella Rose Giannulli, 21, as recruits to the USC crew team, though neither actually participated in the sport. (The USC Registrar has since confirmed that “Olivia Jade Giannulli and Isabella Rose Giannulli are not currently enrolled” at the university.)

Olivia Jade and Bella Giannulli. bella giannulli/instagram

Still, Loughlin is adamant that the allegations against her aren’t true.

“Does she regret not taking the deal? Of course she does, because it would have been easier,” says the source. “But taking the deal would have admitted guilt, and she believes she was duped by unscrupulous people who enriched themselves off of her. It is her position that she was not some sort of criminal mastermind.”

The source adds, “She just wanted what was best for her daughters. And it has turned into an ongoing nightmare.”

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