Former San Diego mayor Maureen O’Connor appeared in federal court Thursday to plead not guilty on a money laundering charge. She is accused of embezzling money from non-profit organizations to fuel a gambling habit. She was accompanied by her attorney Eugene Iredale. — Peggy Peattie

Former San Diego Mayor Maureen O’Connor took $2 million from a nonprofit foundation to feed a gambling addiction in which she lost more than $1 billion over a nine-year period, federal prosecutors said Thursday.

O’Connor, 66, appeared in federal court and pleaded not guilty to a money laundering charge as part of a deferred prosecution. Under the arrangement with federal prosecutors, she has two years to repay the $2 million taken from the R.P. Foundation, a nonprofit set up by her late husband, Robert O. Peterson.

Peterson was co-founder of the Jack-In-The-Box restaurant chain and later Southern California First National Bank Corp., which eventually became part of the Union Bank empire.

Prosecutors said O’Connor, who is in poor physical health, had $1 billion in gambling winnings between 2000 and 2009, but she posted losses during the same period that were greater than that amount. Her preferred game was video poker. They described her now as “destitute.”

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