O’Connor, 66, who was San Diego’s mayor from 1986 to 1992, used a cane and a family friend to help her walk into and out of the room.
Attorney Eugene Iredale said she would take no questions, adding that she is still recovering from brain surgery, in which a large tumor was removed in 2011.
Iredale and Assistant U.S. Attorney Phillip Halpern told reporters earlier that both sides agreed her health was too fragile for a trial and so she entered into an agreement that halted criminal proceedings for two years with the promise of repaying the $2 million.
“The prosecution is frozen, stayed, in limbo for two years,” said Iredale. “At the end of the two years, that case is dismissed … without any finding of guilt.”
O’Connor gambled more than $1 billion of her assets at various casinos between 2000 and 2009, but the federal violation came when she used funds from the R. P. Foundation that her late husband, Robert Peterson, set up for charities before his death in 1994. Peterson was the founder of the Jack in the Box restaurant chain.
O’Connor now lives with her twin sister in La Jolla and only has her mayoral pension for support. At the press conference, she spoke about her depression following the deaths of her husband, three siblings and some close friends.
“I still intend to pay it back. I never meant to hurt the city,” said O’Connor, who started to cry, and then stood up and left the room with assistance.
O’Connor and her sister have sued three investors who they say defaulted on more than $7 million when the investors took over a Mendocino County hotel the sisters owned. Iredale said O’Connor has signed an agreement that if she recovers $2 million in the lawsuit, it will all be turned over to her late husband’s trust.
Iredale said the gambling stopped after the removal of her brain tumor. He released letters from physicians who described her memory loss and cognitive deficits. O’Connor went to a hospital emergency room in January 2011 after she saw flashing lights and could not speak.
When she underwent brain-imaging studies, doctors found a large mass — a benign tumor — in the center of her brain. Iredale said the tumor affected her judgment and reasoning and she experienced hallucinations.
O’Connor was elected mayor in 1985 after Roger Hedgecock resigned when he was convicted of perjury and conspiracy to violate campaign laws.
“Today is a sad day for the city of San Diego,” Halpern said following O’Connor’s court appearance. Federal prosecutors, he said, “take no pleasure” in filing the case against O’Connor, but, he added, “No one is above the law.”