SAN DIEGO - Former San Diego Mayor Maureen O'Connor acknowledged Thursday in federal court that she took $2.1 million from her late husband's charitable foundation and gambled it away during a nearly decade-long binge when she wagered more than $1 billion.

O'Connor, 66, pleaded not guilty to money laundering under a deal with federal prosecutors that will allow her to defer prosecution for two years as she works to repay the money.

Her lawyer blamed gambling addiction and said his client wound up losing $13 million while playing mainly video poker at casinos in San Diego, Las Vegas and Atlantic City, N.J.

O'Connor was the Democratic leader of California's second-largest city from 1986 to 1992. She was elected for two terms as San Diego's first female leader after eight years on the City Council. She was married to Robert O. Peterson, founder of the Jack in the Box restaurant chain.

She wagered more than $1 billion from 2000 to 2009, with a net loss of $13 million, according to her attorney.

"Maureen O'Connor was a selfless public official who contributed much to the well-being of San Diego," said U.S. Attorney Laura Duffy. "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."

O'Connor walked with a cane and appeared frail, struggling to maintain composure in court as her attorney wrapped his arm around her shoulder. At a news conference, she said she always intended to repay the foundation and appeared to blame her behaviour on a brain tumour that was diagnosed in 2011.

"There are two Maureens — Maureen No. 1 and Maureen No. 2," she said. "Maureen No. 2 is the Maureen who did not know she had a tumour growing in her brain."

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