Mayor Catherine Pugh has resigned from the University of Maryland Medical System board after she came under fire for failing to fully disclose the $500,000 business relationship she started in 2011 with the hospital system.
Baltimore Mayor Catherine Pugh’s book company has given $7,040 in state political contributions since 2015 — including a $5,000 gift to her own campaign.
Healthy Holly LLC also gave $1,000 through ticket purchases to Baltimore County Executive Johnny Olszewski Jr.’s campaign last year, as well as $1,000 to state Sen. Jill Carter’s election committee.
The Olszewski campaign said Tuesday it would return the money, and Carter said she was looking into whether she could donate it to charity.
Campaign finance records show that Healthy Holly LLC gave a $5,000 check to Pugh’s campaign in November 2015. The company contributed to Carter’s campaign last June and to Olszewski’s that August. It also gave $40 to the B.E.S.T. Democratic Club PAC in 2016.
Carter started a storm last week about conflicts of interest at the medical system by introducing legislation that would would make it illegal for board members to profit from contracts with the hospitals they govern. She said Tuesday she would explore whether her campaign can donate the $1,000 to an after-school program or other educational charity.
Jared DeMarinis, director of candidacy and campaign finance for the Maryland Board of Elections, said such a use of the funds is not permitted. “She would have to give it back to Healthy Holly,” DeMarinis said.
Colleen Martin-Lauer, a fundraiser for the Olszewski campaign, told The Baltimore Sun on Tuesday that the county executive previously “wasn’t aware of the contribution.”
“As soon as it was brought to his attention, he directed his treasurer to return the contribution,” she said.
She added that “recent news reports have raised questions about the transactions of the Healthy Holly books. Because of those questions, he felt it was most appropriate to return that money.”
Damon Effingham, the executive director of the government watchdog group Common Cause Maryland, said the situation underscored transparency issues related to corporate donations.
Because LLC’s can be hard to trace, voters many times “don’t know who’s influencing candidates,” he said.
The University of Maryland Medical System labeled its most recent $100,000 purchase of books from Baltimore Mayor Catherine Pugh as a "grant" to the city public school system, a mischaracterization that tax experts say is a violation of federal reporting rules for tax-exempt hospitals.
“This is a problem of LLC’s being allowed to give to candidates,” said Effingham, adding that the group has called for ending corporate donations to campaigns. “I doubt that Sen. Carter or County Executive Olszewski had any idea that there was some conflict of interest [with the book deal] … but they accepted donations from an LLC that was connected to it, so now they get pulled into this story regardless.”
He added that the controversy surrounding Healthy Holly also highlights the ethical questions raised when elected officials don’t divest from business interests.
Pugh has conducted the bulk of her political donations through an eponymous company, Catherine E. Pugh and Company. The company has donated $80,000 over the past 15 years, according to state campaign finance records.
Her own campaign was the biggest beneficiary, receiving a $52,000 loan and $10,400 in contributions.
Catherine E. Pugh and Company has donated to various other local campaigns over the years. One day in August last year, Healthy Holly and Catherine E. Pugh and Company both gave $1,000 to Olszewski.
Pugh formed the company named after her in 1997 but forfeited it after two years, meaning that “the right of the entity to conduct business” in Maryland “has been relinquished,” according to the Maryland Department of Assessments and Taxation.
The mayor has reported her ownership of the company, Healthy Holly, and her thrift store, 2 Chic Boutique, on the financial disclosure forms she has submitted to the Baltimore Board of Ethics for 2016 and 2017.
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The book company and the Pigtown thrift are still in good standing with the Maryland Department of Assessments and Taxation.
DeMarinis said he is not familiar with a case where a forfeited company has been challenged for its ability to make political contributions.
The status at the department of assessments “does not affect the ability of entities from making political contributions,” he said. “As long as it’s a legal business, it can make political contributions.”
When told how state regulations describe a forfeited company as having “no existence under the laws” of Maryland, DeMarinis said that sounded like it would prohibit donations but that there is no clear answer to such a scenario in state law.