Former San Diego mayor to pay $2M

SAN DIEGO -- A former mayor accused of raiding her late husband's charity to cover high-stakes casino debts agreed with federal prosecutors yesterday to pay more than $2 million in restitution and undergo treatment for gambling addiction.

Maureen O'Connor, mayor of San Diego between 1988 and 1992, was married to Robert O. Peterson, founder of the Jack-in-the-Box fast-food chain, and it was from his charitable foundation that she pilfered money to cover her gambling losses.

Peterson died in 1994, leaving his wife as one of three R.P. Foundation trustees who were barred from receiving any personal financial benefit from the charity.

Court documents show O'Connor amassed winnings of more than $1 billion between 2000 and 2009 in various casinos in Las Vegas, San Diego, and Atlantic City, but went on to suffer even larger gambling losses, resulting in sizable debts.

To stay afloat while continuing to gamble, she liquidated her savings, sold off numerous real estate holdings and valuable personal belongings and even took out second and third mortgages on her home.

Left with few if any assets by the fall of 2008, court records say, O'Connor turned to her husband's foundation and took more than $2 million as illegal personal "loans," ultimately forcing the foundation to close its bank accounts in April 2009.

The deferred-prosecution agreement settles criminal charges against O'Connor, 66, who underwent surgery in 2011 for removal of a brain tumor and had additional medical complications that make it unlikely she could be brought to trial, prosecutors said. -- Reuters