Pugh told The Baltimore Sun on March 20 that she had not sold her books beyond those she provided to UMMS, which paid her $500,000 over several years for 100,000 copies.
There was a problem with that statement, an official with health insurer Kaiser Permanente warned a top Pugh aide. It was not true.
“Team - I got a nervous call from folks at Kaiser,” wrote Karen Stokes, a Pugh adviser and the city’s top lobbyist, in a March 21 email to three other senior administration officials. “...apparently the Mayor has said that she has sold her books to UMMS only. However, she has, in fact, sold books to Kaiser.
“Kaiser loves the partnership and there is nothing untoward about the purchases… except that the Mayors statement is not true.”
The email was one of hundreds The Sun obtained from Pugh’s office under a Maryland Public Information Act request.
Citing health reasons, Pugh, 69, announced April 1 that she was taking an indefinite leave of absence from her $185,000-a-year job as mayor amid a growing controversy over sales of her self-published series of health books for children.
The Maryland State Prosecutor is investigating the book deals. And Thursday, the FBI and Internal Revenue Service raided Pugh’s two houses and her City Hall office, as well as other locations. The focus of the federal investigation is not clear.
Initially, Pugh vowed to return to work when she recovered from pneumonia, but there have been numerous calls for her to resign. Her attorney said Friday that she was not well enough to make a decision about her future, and would not do so before Tuesday.
The emails The Sun obtained show city officials and UMMS executives closely followed the fast-moving developments related to the Healthy Holly sales and other potential conflicts of interest on the UMMS board of directors. Pugh was a board member when she sold the books to UMMS for distribution to city schoolchildren.
Pugh’s first acknowledgement of a single sale to UMMS worth $100,000 would eventually grow to her receiving nearly $800,000 in deals for children’s books with UMMS, Kaiser Permanente, Associated Black Charities, CareFirst BlueCross BlueShield and other groups. Kaiser, CareFirst and Associated Black Charities are among the buyers who do business with city government.
Pugh picked up on the news coverage from the start. At 1:33 a.m. March 14, the mayor forwarded an email from her personal Gmail account to top aide James T. Smith. A Google Alert she’d set for “Catherine Pugh” had delivered to her inbox a Sun report that nine members of the UMMS board — including the mayor — had business deals with the hospital network.
State records showed that Maryland’s business and political elite held unpaid, voting seats on the nonprofit system’s 30-member board. As they oversaw a medical system with $4 billion in revenue, the companies of a third of the members received compensation from UMMS through contracts for goods and services such as pest control and civil engineering, according to financial disclosure forms The Sun reviewed.
The article Pugh sent to Smith was the first in a series that would lead to the resignation of UMMS CEO Robert Chrencik and three board members — including Pugh. Four other members have taken leaves of absence. The FBI and IRS issued subpoenas to UMMS for records related to the medical system’s dealings with Pugh.
City Council President Bernard C. “Jack” Young Jr., a Democrat, is serving as acting mayor. One of his first acts was to place Stokes and Bruce Williams, Pugh’s chief of staff and the person Stokes addressed her March 21 email to, on paid leave.
Lester Davis, a spokesman for Young, said Monday that the two were no longer employed by city government.
Neither Stokes nor Williams could be reached for comment.
Emails show UMMS board members also paid close attention as the scandal unfolded and state leaders reacted. On that same day Pugh sent her early morning email to Smith, an aide to Chrencik sent an email from the CEO to Pugh and other board members to alert them to the article and urged them to refer questions from reporters to a UMMS spokesman.
“As anticipated, the article appeared online last night and in this morning’s Baltimore Sun,” Chrencik wrote. “News reporting often evolves as new information is obtained or news develops; we will be monitoring this story over the next few days.”
Four days later, UMMS Board Chairman Stephen Burch passed along comments Republican Gov. Larry Hogan made during a news conference and urged board members to read them.
“During the governor’s press briefing that concluded a few moments ago, Governor Hogan reiterated his outrage as he learned of the business relationships and mentioned he felt board members should either have a board seat or business relationship, not both,” Burch wrote.
Even before the news broke publicly, other emails show UMMS and Pugh aides were aware that legislation sponsored by Democratic state Sen. Jill P. Carter of Baltimore was raising the question of potential board conflicts of interest.
On Feb. 5, Kristin Jones Bryce, a UMMS vice president, sent Smith an email with the subject line: “SB 619,” Carter’s proposed legislation to regulate the dealings of UMMS board members. Smith, too, sat on the medical system board.
“I’m clueless,” Bryce wrote. “Let me know if you have any thoughts.”
There was no response from Smith included in the emails provided to The Sun.
Bryce sent Smith another email several hours later, quoting the bill’s provisions. Among them: that a board member could not be employed by or have a financial interest in a business entity subject to the system’s authority or one that is seeking or has a UMMS contract.
Meanwhile, Smith was discussing the legislation and Carter with Mark Wasserman, a UMMS vice president for external affairs.
“What is the mayor’s relationship with Jill Carter?” stated the subject line of an email exchange between Wasserman and Smith that went on between Feb. 5 and 6.
“Good friends, as far as I know,” Smith said.
“Thought so. Thanks,” Wasserman responded.
The next day, Smith amended his earlier comment.
“Not as close as I thought actually,” Smith emailed.
“Got it,” responded Wasserman, copying in Bryce.
Carter worked for Pugh as director of the city’s civil rights office, but left the job after she became a senator.
The General Assembly passed UMMS reform legislation and Hogan has signed it. It requires all current board members to resign by the end of the year and bars future members from holding single-source contracts with the hospital network.
The emails also revealed that members of the medical system board enjoyed perks, and were not shy about political involvement.
In one sent in August, the system's then-Chief Medical Officer Stephen Bartlett invited board members to a $1,000-per-person fundraiser at his Cockeysville home for Hogan. Among the event's co-hosts were other board members, including Burch, James "Chip" DiPaula, George Doetsch Jr., Francis Kelly, Kevin O'Connor, Scott Rifkin, James Soltesz, Len Stoler, Walter Tilley and Alexander Williams, as well as Chrencik.
Kelly, Soltesz and Tilley are now on leave from the board.
The board's annual retreat was held at the Inn at Perry Cabin, an Eastern Shore resort, in October 2017. It included a complimentary spa treatment and golf rounds for members, other messages show.
Baltimore Sun reporters Scott Dance and Kevin Rector contributed to this article.