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'A cautionary tale': Supporters say Baltimore mayor's use of business connections helped fuel her political rise — and fall

Catherine Pugh ran for mayor of Baltimore in part on a promise: She would leverage her wealthy connections in the business community to inject money into a cash-strapped city. She would persuade them to bankroll an expansion of summer jobs for teens. She would cajole until they came up with enough money to bring a model anti-violence program here.

Now some in her network of supporters say the same character traits that led to her political rise — her ability to forge alliances with the rich and powerful and her strong-willed insistence that her way is right — have also led to her fall.

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As federal, state and local investigations into her business dealings continue, Pugh, 69, has been holed up inside her Ashburton home suffering from pneumonia and emotional distress as her dream job slipped away, her reputation in tatters. She has been accused of no crime but has lost virtually all of her political capital.

“This is a cautionary tale about the coercive influence of big donors and the business community,” said Mark McLaurin, political director of the Service Employees International Union, who considers Pugh a friend.

“Catherine has never wanted anything other than to be the mayor of Baltimore. The real tragedy here is she finally obtained the thing she so badly wanted and now it’s all going away.”

Pugh, who had been on a leave of absence she announced April 1, resigned Thursday, effective immediately.

Hauling out boxes of “Healthy Holly” books and documents, federal agents from the FBI and IRS executed search warrants April 25 at Pugh’s City Hall office, her two houses, and the offices of allies, as the growing scandal consumed the city’s attention, generated national headlines and provoked fresh calls for the embattled Democratic mayor’s resignation.

Friends and allies say they believe Pugh’s production and sale of her self-published “Healthy Holly” books began innocently and then spiraled out of control, upending her mayoralty.

It was just seven weeks ago that The Baltimore Sun reported the University of Maryland Medical System, on whose board Pugh sat, had paid her $100,000 in 2017 for the clumsily published books — they contain spelling and grammatical errors — to distribute to city school children.

But her story would change.

Within 24 hours, she acknowledged she had been paid $500,000 by the medical system over several years, more than she had initially confirmed. But she pledged there were no more such deals.

As some in city and state government blasted what they called self-dealing, Pugh was unrepentant — and called inquiries into her deals with UMMS a “witch hunt.”

Then it came out that she’d collected at least $800,000 in all from various entities.

Reporting revealed health insurer Kaiser Permanente and Associated Black Charities had bought a total of roughly 30,000 copies of Pugh’s books, paying her nearly $200,000. Pugh voted in 2017 to approve a $48 million contract for Kaiser Permanente to provide insurance to city employees. Associated Black Charities has a deal with the city to manage a $13 million youth fund.

And Columbia businessman J.P. Grant — who has handled millions of dollars in transactions through the city’s master lease arrangement — said his company cut a check for $100,000 to Pugh’s Healthy Holly LLC in October 2016. He said he received a copy of one book but no documentation of how his money would be used.

Kaiser Permanente, Associated Black Charities and Grant have all said that they wanted to help make books about good health habits available to city residents and that their payments had nothing to do with their business with the city.

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Some political observers at first thought Pugh could get past the book controversy — do her job, focus on her efforts to address the root causes of crime and hope new Police Commissioner Michael Harrison could stem the violence. If that could happen, the mayor could survive the scandal and win re-election, her supporters as well as some other observers believed.

Clarence Mitchell IV, the radio host known as C4, was among those who initially saw a chance that Pugh could survive the UMMS deals if crime rates improved.

His view changed once it was revealed that Kaiser Permanente had paid $114,000 for the books before Pugh voted to award it the city health insurance contract. Mitchell said that looked like an abuse of her power.

“That was the straw that broke it for me,” he said. “That’s when I said she should resign.”

Mitchell says he thought Pugh would have quit long before now. Instead, for weeks she defiantly said though her spokesman that she planned to return to work, even as calls mounted for her resignation.

For state Sen. Bill Ferguson, a Baltimore Democrat who endorsed Pugh for mayor, it was the “witch hunt” comment that troubled him. It sounded like Republican President Donald Trump’s repudiation of federal investigations into Russian election meddling.

“Calling it a witch hunt set off a lot of alarm bells for me,” Ferguson said.

During her successful campaign for mayor — in which business leaders and University of Maryland Medical System officials were large donors — Pugh had presented herself as an ethical alternative to Sheila Dixon, the former mayor and Pugh’s main competition, who’d been forced from office amid scandal. A political action committee backing Pugh circulated a flyer with a manipulated photo of Dixon made to look like a police mug shot, contrasted with a picture of Pugh wearing pearls. (Dixon was never arrested or jailed for perjury and embezzling gifts cards intended for the needy. The mug shot photo was doctored.)

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“What’s most challenging for me is I did not see this coming,” Ferguson said of the revelations about Pugh’s sales of her books. “I supported Catherine because I believed she was passionate about the city of Baltimore. She had a deep history and experience in the city fighting for community. Even though we disagreed on some policy areas, I would go back to the the fact she was fundamentally focused on the city’s behalf.”

Sen. Jill P. Carter, a supporter of Pugh who submitted legislation in the General Assembly this year to prevent UMMS from entering business deals with its board members, said she backed Pugh’s mayoral run in part because she saw how hard she worked.

Pugh got up early and stayed up late trying to help the city, Carter said. She applauded Pugh for creating a Violence Reduction Initiative to provide support for at-risk city youth and frequently walked the city’s streets talking to residents.

But her hard-charging nature also meant she didn’t always listen to those around her offering her critiques of her approach. Carter worked for Pugh as director of the city’s civil rights office, but left the job after she became a senator.

“Her strengths may end up being her weaknesses,” Carter said. “She has the strongest work ethic I’ve ever seen. She doesn’t trust others to do much. Trusting others to handle things for her or taking their advice could have benefited her.

“There’s an arrogance to how she approaches things, and that’s what led to her demise,” Carter said. “She only wanted ‘yes people’ around her.”

Carter noted that Pugh did seem always to have her ears open to the business community. She backed a bill for mandatory minimum gun sentences that was supported by business leaders and, breaking a campaign promise, she vetoed legislation for a $15 an hour minimum wage in the city.

“In retrospect, I think I made a mistake,” Carter said of endorsing Pugh.

Pugh — who hasn’t spoken with reporters since announcing her leave April 1 — has said her idea for the “Healthy Holly” book series started from a place of altruism.

More than a decade ago, she said, she came up with the idea while attending a conference about childhood obesity — particularly among African American children. She got a little bored, started scribbling on a piece of paper and sketched out an image of “Healthy Holly.”

“What they said was our young, the young people of this country, will become the most obese population of people in the next generation,” Pugh said at a news conference March 28.

“When I got home I had scribbled this book called ‘Healthy Holly,’” she said. “The focus again was getting children to exercise and eat right.”

Ben Jealous, the former NAACP president and Democratic nominee for Maryland governor, said he had considered running for mayor in the 2016 election but endorsed Pugh after meeting with her.

“The qualities that I saw in her I liked,” Jealous said. “I saw she had tremendous empathy for the squeegee kids and all the kids in the city.”

But then, as the scandal broke, Jealous noticed that Pugh’s story kept changing.“This is the way somebody behaves when she got caught in a lie,” he said.

He also said that when he met with the mayor earlier this year, he observed she was trying to micromanage city government.

“She’s in real trouble if she thinks she can run the city by herself,” he recalled thinking. “That was the one fatal flaw with Cathy. She felt she could do everybody’s job.”

As mayor, Pugh frequently solicited funds from the business community for her initiatives, including charitable donations to fund the anti-violence Roca program, pay for buses for students to attend a rally in Washington against gun violence, and launch a jobs van that travels across the city to help unemployed residents find work.

She even sought a blanket waiver from the city’s ethics regulations so she could solicit funds from private donors without first gaining approval from the ethics board. Expressing concern about the attempt to circumvent ethics rules, Baltimore’s ethics panel last year unanimously rejected Pugh’s request to be exempted.

Shortly after she was elected mayor, ethics experts warned Pugh to be careful about her connections to businesses and philanthropic groups, arguing that the network of collaborators she nurtured during nearly two decades in public office could be a potential hazard. She needed to take steps to address any conflicts of interest — real or perceived — or her connections could cloud her administration, they said.

Like Carter, the SEIU’s McLaurin said he noticed Pugh didn’t pay much attention to those who criticized her actions. She never built strong bridges with members of the City Council, for instance, and bristled at some criticism.

“The other untold story here is her abject disinterest in building a governing coalition,” McLaurin said. “I’m bitterly disappointed. My members who scrub toilets [for a living] gave money to us and we gave it to her. My members worked all day and then took their evenings and weekends to knock doors for her. To the extent that she’s crashed and burned, it’s personally painful for all of us.”

In recent weeks, a growing chorus of Marylanders called on Pugh to resign — including the entire Baltimore City Council, the city’s lawmakers in the House of Delegates, Gov. Larry Hogan, Maryland Comptroller Peter Franchot and the pro-business Greater Baltimore Committee.

The Greater Baltimore Committee’s board members were a source of campaign contributions for Pugh. Between her successful 2016 mayoral run and fundraising efforts for a re-election campaign, she received $40,980 from 15 of its members, according to state campaign finance filings.

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Similarly, board members and senior executives with the University of Maryland Medical System and its flagship medical center donated or loaned nearly $292,000 to Pugh’s Senate and mayoral campaign committees since 2005, helping fuel her rise to mayor.

A month ago, the Rev. Al Gwynn Sr., pastor at Friendship Baptist Church, said he could foresee supporting Pugh for reelection if she made no further missteps. In an interview Friday, he questioned why other UMMS board members doing business with the hospital network haven’t received as much attention.

But he also said the mayor now had no choice but to resign.

“She’s in a bad place right now, that’s for sure,” Gwynn said.

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