Ex-San Diego mayor gambled away $1 billion, prosecutors say

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Former San Diego Mayor Maureen O’Connor acknowledged in federal court Thursday that she gambled away millions of dollars that her late husband had earmarked for charity purposes.

Looking frail, the 66-year-old O’Connor agreed to enter into a deferred prosecution on a charge of stealing the money from a charitable foundation. Under a bargain with prosecutors, O’Connor agreed to make $2 million in restitution; if she violates no further laws in the next two years, the charge may be dismissed.

O’Connor, a Democrat, was the city’s first woman mayor, serving from 1986 to 1992. Her husband, Robert O. Peterson, who died in 1994 at age 78, founded the Jack in the Box fast-food chain and made a fortune in the restaurant, hotel and banking industries.

O’Connor is destitute after gambling away $1 billion at casinos in the San Diego area and Las Vegas and Atlantic City from 2000 to 2009, according to prosecutors. She has admitted having a gambling addiction, prosecutors said.

When she no longer had enough personsal money to gamble with, she took money in 2008-9 from the R.P. Foundation started by her husband, prosecutors said.

‘Today is a sad day for the city of San Diego,’ said Asst. U.S. Atty. Phillip Halpern, the lead prosecutor, adding that he ‘takes no pleasure’ in bringing the prosecution.

O’Connor, who underwent surgery to remove a brain tumor in 2011, used a cane and needed help walking as she entered the courtroom of federal Judge David Bartick. In her youth, she had been a star swimmer and later a physical education teacher before being elected to the City Council in 1971 as a maverick Democrat.

The foundation, which contributed to charities such as the City of Hope, Alzheimer’s Association, and San Diego Hospice, was forced to close its books due to O’Connor’s misallocation of funds, prosecutors said.

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-- Tony Perry in San Diego