Former San Diego Mayor Maureen O'Connor embezzled $2.1 million from a nonprofit charitable foundation founded by her late husband in order to support a serious gambling addiction, according to the U.S. attorney's office.
Federal prosecutors Thursday said she gambled away more than $1 billion during a 10-year period, erasing approximately $1 billion in winnings and plunging her into debt.
O'Connor, 66, agreed in court Thursday to repay the money she took from the R.P. Foundation, along with any tax liability, over the next two years as part of a deferred prosecution agreement. She faced up to a maximum of 10 years in prison.
"Maureen O'Connor was a selfless public official who contributed much to the well-being of San Diego," U.S. Attorney Laura Duffy said in a statement. “However, no figure, regardless of how much good they've done or how much they've given to charity, can escape criminal liability with impunity."
The mayor of San Diego from 1986 to 1992, O'Connor recently suffered serious complications from the removal of a brain tumor, including a pulmonary embolism and cognitive impairment. Because of her ongoing and serious medical condition, prosecutors felt it was highly unlikely she could be brought to trial.
O'Connor was represented by attorney Eugene Iredale of Iredale and Yoo APC.
According to court documents, her gambling troubles started in 2000, when, over the next 10 years, she won more than $1 billion in various casinos in Las Vegas, Atlantic City and San Diego. But, she also lost more than $1 billion during that time, incurring large debts at a number of casinos.
In order to pay her debts and continue gambling, prosecutors said she liquidated her savings, sold numerous real estate holdings, auctioned valuable personal items and obtained second and third mortgages on her La Jolla home.
Then, between September 2008 and March 2009, O'Connor misappropriated more than $2.1 million from the R.P. Foundation, which was created by her husband and Jack in the Box (Nasdaq: JACK) founder Robert Peterson. Peterson died in 1994.
O'Connor was one of the three R.P. Foundation trustees who were specifically prohibited from receiving a benefit from the charity.
"O'Connor characterized the misappropriated funds as 'loans' from the R. P. Foundation to conceal her illegal activity, gambling addiction and to evade the payment of tax on her embezzled funds," said N. Dawn Mertz, acting special agent in charge for IRS Criminal Investigation in Los Angeles. "O'Connor's guilty plea emphasizes that those who violate our nation's tax laws, regardless of their status, face investigation by IRS criminal investigation, prosecution for their crimes and remain liable for their tax liability."
As part of the plea agreement, O'Connor agreed to receive treatment for her gambling addiction.
The case is U.S. v. O’Connor, 13-00537, U.S. District Court, Southern District of California (San Diego).