Former San Diego Mayor Maureen O'Connor pleaded innocent to charges of misappropriating $2 million from her late husband's non-profit foundation.
U.S. prosecutors said O'Connor used funds from the R.P. Foundation to gamble, the U-T San Diego newspaper reported Friday.
O'Connor, 66, reportedly looked frail when she appeared in court in San Diego to enter a plea before Magistrate Judge David Bartick.
Under an agreement, O'Connor has two years to repay money taken from the foundation set up by her husband, Robert O. Peterson, a co-founder of Jack in the Box.
The case won't proceed during the two-year period and can be dismissed if O'Connor complies with conditions of the arrangement.
Prosecutors said O'Connor had net gambling losses of $13 million despite winnings of $1 billion from 2000-09.
They described her current financial condition as "destitute."
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