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Former mayor took $2M from foundation

SAN DIEGO — Former Mayor Maureen O’Connor misappropriated millions of dollars from her deceased husband’s charitable foundation,  gambling away the money she took.her lawyer said Thursday.

O’Connor, 66, entered into a deferred prosecution agreement with federal prosecutors and agreed to repay the foundation within two years and to seek treatment for a gambling addiction, Eugene Iredale said at a news conference after the court hearing.

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Iredale said that O’Connor lost more than  $13 million over a 10-year period playing video poker. He said O’Connor’s compulsive gambling may have been caused by a large brain tumor that was discovered and surgically removed in 2011.

Prosecutors said that O’Connor won more than $1 billion gambling at casinos in San Diego, Las Vegas and Atlantic City between 2000 and 2009. But she lost even more over the same period, they said.

O’Connor has also undergone serious and significant medical treatment recently after a brain tumor was removed in 2011. The tumor was in an area of the brain that involves “logic, reasoning and judgment,” said O’Connor’s attorney, Eugene Iredale.

O’Connor’s husband, Jack in the Box founder Robert O. Peterson, died in 1994. She said three of her 12 siblings and two best friends have also died. O’Connor said she began to gamble heavily in 2001.

“I did borrow the money,” a tearful O’Connor said outside court after her court appearance. “I always intended to pay it back. I still intend to pay it back. I never meant to hurt the city.”

“She played video poker on machines that were programmed to pay out 80 percent of the money that was put in, so that the more you play the more you lose,” Iredale said.

In order to stay afloat financially and continue her gambling spree, O’Connor liquidated her savings, sold numerous real estate holdings and auctioned valuable personal items. She also obtained second and third mortgages on her residence in La Jolla, according to prosecutors.

O’Connor pleaded not guilty to a charge of engaging in unlawful monetary transactions, which will be dismissed as long as she remains law-abiding for the next two years, gets treatment for her gambling addiction and tries to pay the money back.

All parties agreed that O’Connor’s medical condition render it highly improbable — if not impossible — that she could be brought to trial.

Attorney Maria Severson said O’Connor has a more than $7 million lawsuit pending in Superior Court against three people and a German bank over the sale of a Mendicino County hotel in 2005. If the lawsuit is successful, more than $2 million will be paid toward restitution, she said,

O’Connor was elected to the San Diego City Council at age 25 in 1971.

In 1986, she was elected mayor to serve out the term of then-Mayor Roger Hedgecock. She was re-elected to serve out a full four-year term from 1988 to 1992.

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