In an emotional acknowledgement of guilt, O’Connor admitted to gambling away her massive fortune.
“I never meant to hurt the city I loved,” she said. “I always intended to pay it back and I still intend to pay it back.”
After pleading not guilty in federal court, she agreed to what is called deferred prosecution. He attorney, Eugene Iredale explained the agreement.
“We’ve come up with something that addresses the issue, discloses the facts, deals with problems but doesn’t not require a criminal conviction,” Iredale said.
The US Attorney only offers deferred prosecution for unique cases. In this instance, it’s the revelation that O’Connor is suffering with multiple brain tumors and has undergone surgery to remove them.
“The fact that she had a severe medical condition that would make it difficult or not impossible to bring this case to court,” said federal prosecutor Phillip Halpern.
Her attorney contends the tumors may have contributed to her gambling addiction.
“They were in a place that put pressure on the brain, in the area that deals with things like judgment and the ability to control impulse,” he said.
“We believe that her gambling proceeded her medical condition,” said prosecutor Halpern.
O’Connor served as mayor of San Diego for six years from 1986 to 1992. She was an avid public servant, her wealth coming from her husband, Robert O Peterson, the founder of Jack N’ the Box. O’Connor said it was his death in 1994 that began her downward spiral.
“It was at that time in my life where I lost my husband. I lost three of my siblings and I lost my two best friends,” she said.
It was casino tax filings that tipped off the IRS to her gambling problem and misappropriating of funds from her husband charity.
“Her winnings were over a billion dollars, but her loses exceeded that,” said Halpern. “She ended up with a net loss such that it resulted in her bankrupting her entire estate basically.”
But her attorney said the real net loss was in the neighborhood of $13 to 15 million over a 10 year period.
“It would be correct to say she gambled the fortune away.”
Under the deferred prosecution agreement, O’Connor agreed to pay back the $2 million she took from the foundation and seek counseling for her gambling addiction. If she does, her case will be dismissed.