Federal prosecutors say former San Diego mayor Maureen O'Connor, 66, gambled away millions of dollars, and embezzled money from her late husband's foundation in the process.
CAVANAUGH: We begin today's show with very sad news about San Diego mayor Maureen O'Connor. She was in court today to answer charges linked to a gambling addiction that caused her to lose millions of dollars. Tom Fudge joins me now with more on this story. FUDGE: Hi, Maureen. CAVANAUGH: Testimony us what happened in court today. FUDGE: Well, Maureen O'Connor showed up, and it was, I have to say, a sad sight. She had a very flushed face. She was walking with a cane. She's 66 years old. Not nearly the dynamic character she was when she was the mayor of San Diego in the 1980s. She was there to face charges that she basically embezzled about $2.8 million from the RP foundation, which was founded by her late husband, who by the way is named -- was named Robert Peterson, and was founder of the jack in the box restaurant chain. So she was there to answer to those charges. And it was an interesting criminal case situation. Although she pleaded not guilty, she has owned up to everything that she has done, that she's accused of. The embezzlement of the money, and what the prosecution is doing in this case is they are bringing against her a deferred prosecution. That means that if over the next two years, Maureen O'Connor is able to pay restitution and pay back the money she's accused of taking from this foundation, charges will be dismissed. CAVANAUGH: Now, after the Court proceeding, there was a news conference in which details of a gambling addiction were revealed about the former mayor. Tell us about that. FUDGE: Yes. Gambling addiction was the word that basically everybody was using to describe Maureen O'Connor's problem. Apparently she became addicted to video gambling. She would if to local casinos, Las Vegas, and sit in front of these screens that we probably all have seen and put money into them. The prosecution actually said that if you add up all the money that she gambled over a period of time, it would add up to about $1 billion. Now, that's a little misleading. Her attorneys said when she actually ended up losing was something in the neighborhood of $13 million. But this was over a decade-long period. And during this period, they want to point out, the defense attorney wants to point out, that she was suffering from a very serious medical condition, a brain tumor. In fact, there was even a suggestion that the brain tumor may have had something to do with the addiction, but that's difficult to say. I think what we can say is this person who was a very prominent local politician came down with a very -- some severe health problems, and a very serious gambling addiction which may have put her fortune in jeopardy. CAVANAUGH: And what happens next? Do we have any idea? FUDGE: What happens next, as I explained to you, what the prosecution is doing in this situation, they're using a deferred prosecution, meaning that over the next two years, if she can pay restitution and do all the things she's being asked to do, then the charges will be dismissed. Now, if that doesn't go well, they can go back to court for this felony charge. I mean, she can face up to ten years in prison. So that is a possibility in this case. CAVANAUGH: Thank you very much.
O’Connor appeared in federal court Thursday morning and pleaded not guilty to embezzlement charges. She has entered into a deferred prosecution agreement in which she acknowledged misappropriating millions of dollars from the R.P. Foundation. She has agreed to repay the foundation more than $2 million and to seek treatment for her gambling addiction.
The U.S. Attorney agreed to a deferred prosecution due to O'Connor's health. The former mayor has suffered from a brain tumor, which her lawyer suggested contributed to her gambling addiction.
O'Connor was addicted to video gaming. Prosecutor Phillip Halpern said over the course of a decade O'Connor won as much as $1 billion and lost more than that. Her lawyer said those figures are misleading because they are cumulative numbers and O'Conner never had a billion dollars to lose at any one time.
Attorney Eugene Iredale said his client's total losses were in the neighborhood of $13 million.
O'Connor was San Diego's first female mayor, holding the office for two terms from 1986 to 1992. The popular Democrat was a physical education teacher before entering the political arena. She sat on the City Council and the San Diego Unified Port District Commission prior to becoming mayor.
In 1977, she married Robert O. Peterson, who founded the Jack-In-The-Box fast-food chain and later Southern California First National Bank, which eventually became part of the Union Bank empire. The couple had no children, and he died in 1994.
O'Connor kept a low profile since leaving the mayor's office but her real estate investments recently gained attention, according to U-T San Diego.
She sold the luxury Heritage House resort in Mendocino County for $19.5 million in 2005 and has since sued the German bank that provided financing for the buyers for fraud, the newspaper reported.
In 2010, O'Connor sold the La Jolla home now owned by former Republican presidential nominee Mitt Romney for $2.5 million. The sale was a short sale, and soon after the purchase the county reassessed the property at a $4.5 million value, according to U-T San Diego.
