Mayor Lost $1 Billion: San Diego Mayor Maureen O'Connor's Pleads Not Guilty to Money Laundering, Blames Brain Tumor for Gambling Addicition

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Maureen O'Connor's meteoric rise to winning a political seat in the San Diego City Council at only 25, and later winning two terms as mayor took a staggering dive.

It all culminated on Thursday when she acknowledged in federal court that she took $2.1 million from her late husband's charitable foundation for a decade-long gambling spree in which she both won and then lost more than $1 billion. O'Connor pleaded not guilty to a money laundering charges in an agreement with the Justice Department, deferring prosecution for two years while she tries to repay the foundation.

O'Connor had an estimated fortune between $40 million and $50 million, inherited from her husband, Robert O. Peterson, founder of the Jack in the Box Inc. fast food chain. According to reports, she is now virtually broke, living with a sister. At a news conference, she said she always intended to repay the foundation and appeared to blame her behavior on a brain tumor that was diagnosed in 2011.

O'Connor's gambling habits took her to Sand Diego, Las Vegas and Atlantic City. Between 2000 and 2009, she won about $1 billion dollars. According to MSN, O'Connor is now $13 million in debt. The U.S. attorney's office said O'Connor's medical condition influenced the decision to strike a deal, saying it may have been impossible to bring the case to trial. The tumor was removed but doctors submitted letters detailing significant ailments.

O'Connor began gambling in 2001, according to the Huffington Post, as "as she struggled with pain and loneliness from the death of her husband from leukemia in 1994 and the passing of several close friends."

Her annual gambling winnings peaked at more than $200 million, said Phillip Halpern, an assistant U.S. attorney. Prosecutors said they didn't know exactly how much she lost but that she also borrowed money from friends and sold property to gamble. In 2010, for instance, she sold her home in La Jolla for $2.5 million. Previously, she sold the Heritage House House Hotel in Mendocino for $7.5 million in 2005 to investors who then defaulted.

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