According to the source, Olivia and her sister, 20-year-old Isabella, were aware that their parents were allegedly speaking to a man who could help them get into the University of Southern California. However, Olivia and Isabella "didn't realize the extreme" lengths that went into admitting them into the university, the source says.
Court documents obtained by ET reveal that Loughlin and Giannulli allegedly paid $500,000 in bribes to have Olivia and Isabella deemed as recruits to the USC crew team, despite the fact that they never participated in the sport. The source says the sisters thought that the money their parents allegedly "donated" was going to scholarships for students actually on the crew team.
"Olivia's still mad at her parents," says the source, adding that she's "terrified at the idea she may have to testify against them."
The situation also seems to be taking a toll on Isabella, who recently deactivated her popular Instagram account. Olivia's account is currently still active, but the comments have been disabled on her most recent posts.
As ET previously reported, Loughlin and Giannulli pleaded not guilty to multiple charges, including a recently added superseding indictment on conspiring to commit fraud and money laundering.
"They in no way felt they were money laundering," an additional source told ET earlier this week. "They thought the money would be used for a donation and to benefit the school. Even so, this has been one of the toughest decisions of Lori's life."
"Lori still believed, in the end, she would just get a slap on the wrist," a third source added. "At this point, she is getting complete clarity and she’s scared and in terrible shape."
Hear more on the ongoing scandal in the video below.