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City councilmen Zeke Cohen and Eric Costello on Mayor Pugh. Both reaffirmed their belief that she needs to resign, as they said in the unanimous city council letter days ago. (Ulysses Muñoz / Baltimore Sun video)

On Thursday morning, City Councilman Zeke Cohen and his staff sat on the fifth floor of City Hall and discussed strategies for curtailing the opioid epidemic in Baltimore's Highlandtown neighborhood.

Three floors below them, FBI and IRS agents raided Mayor Catherine Pugh's office.

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As a federal investigation into Pugh's business dealings thrust the seat of city government into disarray, Baltimore residents expressed concern about how the rapidly developing scandal would affect city operations. Yet Baltimore leaders have pledged to move forward with the work that affects everyday people's lives.

"There are thousands of employees throughout city government who are continuing to show up and do their jobs and fight hard for the people of Baltimore despite the chaos," Cohen said.

Dave Fitz, an FBI spokesman, confirmed that agents from the Baltimore FBI office and the Washington IRS office executed search warrants Thursday at City Hall, Pugh's homes and at least four other addresses. It was the first confirmation that federal authorities were investigating the mayor's activities.

Pugh, 69, is also under investigation by the Maryland Office of the State Prosecutor for sales of her "Healthy Holly" children's books. Pugh was paid $500,000 by the University of Maryland Medical System for 100,000 books to distribute to schoolchildren. The no-bid arrangement was made while she was on the hospital network's unpaid board.

Altogether, Pugh's Healthy Holly LLC took in at least $800,000 from local entities since 2011, The Sun has reported, including from businesses seeking contracts with the city.

The deals were first reported in March, and on April 1, Pugh announced she would take a leave of absence to recover from pneumonia.

Council President Bernard C. "Jack" Young took over as acting mayor, promising to be a steady hand while Pugh remains out for an indefinite time.

"All I'm doing is keeping the city moving forward," Young said as he got into a car outside City Hall Thursday.

Hauling out boxes of “Healthy Holly” books and documents, dozens of federal law enforcement agents struck offices, homes and government buildings across Baltimore as an investigation into Mayor Catherine Pugh’s business dealings widened. FBI agents and IRS officials raided Pugh's office.

While city leaders have echoed Young's pledge, even amid the FBI raids, residents voiced their anxieties.

"The city is at a standstill," said Kaye Whitehead, associate professor of communications at Loyola University Maryland and a WEAA radio talk show host. "There's a feeling that there's another shoe getting ready to drop at any time."

Now that federal agents are involved, Baltimore is under an even harsher spotlight, and the glare could distract from the city's other pressing issues. People with the means to invest in the city, she worries, could be turned off by the apparent leadership crisis.

"Baltimore is not one person," Whitehead said. "But right now, Baltimore is all about one person, unfortunately."

City Councilman Brandon Scott says he's working to remind people that Baltimore's success is not contingent on the mayor. He was spending Thursday with representatives of the National League of Cities, talking about the need for better infrastructure in his district.

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His constituents, he said, aren't obsessing about the mayor and her children's books. They want to know what's being done to get the city's staggering homicide rate under control. They want to know their trash will be picked up on time and that their schools are being funded.

Gov. Larry Hogan is calling on Baltimore’s embattled Mayor Catherine Pugh to resign Thursday, a few hours after federal investigators raided her home and other locations including City Hall.

"Listen, Baltimore and its government is bigger than one person," Scott said. "I'd die before I let the city fail because of the actions of one person. City business goes on."

That's what Bonnie Scible, the owner of The Peanut Shoppe downtown, hopes to see. She's worried the unraveling Healthy Holly scandal is too much of a distraction. She wants to see people focused on reducing crime and homelessness in the city.

"My concern is that the city moves forward and doesn't stay concentrating on this instead of the issues in the city and what we need," she said.

Scott and his fellow council members recently called on Pugh to resign. Baltimore lawmakers in the House of Delegates and the pro-business Greater Baltimore Committee are also demanding she step down. Republican Gov. Larry Hogan echoed them Thursday, saying Pugh has lost the public's trust and is "clearly not fit to lead."

Community activist Kim Trueheart worries that this latest twist will further damage Baltimore's reputation.

"Everybody in this city is not a crook," she said. "If our governor and other critics want to be helpful, they can give me a call, and I can show them how to be supportive."

While the FBI investigation is certainly not a good look for the city, Trueheart said, she is glad Baltimore seems to be moving toward some sort of closure on the Pugh-Healthy Holly saga. The sight of people in FBI windbreakers marching into City Hall is meaningful, she said.

"The uncertainty we've been living under is just heartbreaking," she said. "A lot of investigations have been initiated in the last several weeks, but this is one of the more definitive investigations, in my opinion. It says a lot."

Several investigations and reviews have begun or been requested in the weeks since The Baltimore Sun revealed hundreds of thousands of University of Maryland Medical System deals with nine of its volunteer board members, including Mayor Catherine Pugh.

In Pugh's neighborhood, the sight of federal agents drew a crowd. Neighbors gathered on the sidewalk along with a crowd of reporters and photographers to see what was happening.

Jeffrey Davis, who lives on Dorchester Road around the corner from Pugh, cheered on the FBI agents as they carried boxes of evidence, including some with "Healthy Holly" labels, from Pugh's home.

"You break the law, you go to jail," he said. "You wear the silver bracelets. Ask Sheila Dixon. ... [Pugh] should respect the law."

In 2008, state prosecutors and police searched the home of then-Mayor Dixon. The Democrat became the first Baltimore mayor to face criminal charges, was convicted and resigned.

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Sitting on a park bench near Mount Vernon Square Thursday afternoon, Dixon's former deputy chief of staff Ruffin Brown emphasized that the city doesn't yet have answers about what Pugh may or may not have done wrong. Still, he said, Baltimore suffers anytime its leaders' integrity is questioned.

"The city," Brown said, "deserves better."

Baltimore Sun reporters Ian Duncan and Colin Campbell contributed to this article.

Baltimore residents react to the FBI raids of Baltimore Mayor Catherine Pugh's City Hall office and her two houses. (Kim Hairston, Karl Merton Ferron, Jerry Jackson, and Colin Campbell, Baltimore Sun video)
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