Loughlin, 54, is reportedly devastated that her public image has been tarnished and thinks she may potentially be exonerated.
A source told People of the former Hallmark actress, “Lori feels like so much damage has been done publicly that the only way for her to counter it is to fight this case in court. She feels like once all the evidence is presented, that people will understand how things happened.”
Loughlin and Giannulli, 55, are accused of bribing their daughters' ways into USC by paying $500,000 to scam mastermind William "Rick" Singer. Singer reportedly aided Giannulli and Loughlin's daughters, YouTube star Olivia Jade and aspiring actress Isabella, get recruited to the USC crew team despite neither girl being a rower.
The couple rejected a plea bargain and now face additional charges of money laundering and conspiracy to commit fraud. If convicted, Giannulli and Loughlin face up to 40 years behind bars.
Now, Loughlin believes going to court may be the only way to clear her name.
“She doesn’t want to spend time in jail, but she knows that any sort of plea or conviction at this point will include jail time," a source said. "Her only chance of avoiding jail is to go to court and be found not guilty.”
Loughlin and Giannulli are reportedly planning to use ignorance as a defense, alleging that they didn't realize they were breaking any laws in their dealings with Singer.
“Everyone has seen snippets of the evidence, but there’s a lot more out there. When you look at it in context, you can argue that this is a woman who didn’t understand exactly what she was doing — and she was being counseled and guided by a man who this was his area of expertise," the source said. "When the evidence comes out, she’ll have a case to make ... At this point, if she pleads guilty, she feels like the mitigating evidence will never see the light of day.”
Loughlin's attorney did not immediately return Fox News' request for comment.