For the last decade, former state senator and Baltimore mayor Catherine Pugh did big business all around Baltimore, selling company executives and nonprofit directors on the merits of her self-published “Healthy Holly” children’s books, arguing their health message was good for young black students who could see themselves in Holly and her little brother Herbie.
But according to federal prosecutors, the massive book sales were really a racket — built on a ruse that saw Pugh increase her profits.
Pugh “intentionally double-sold Healthy Holly books by selling books purchased by one buyer to a different buyer without either buyer’s knowledge or consent,” according to a federal indictment made public Wednesday, charging Pugh with 11 criminal counts including conspiracy, wire fraud and tax evasion.
All told, prosecutors said Pugh sold at least 125,000 copies of her books, but printed fewer than 65,000.
Pugh’s attorney, Steve Silverman, declined to comment on the charges Wednesday, saying he “will address this matter in open court.”
The indictment and a plea deal struck by Pugh’s longtime aide and alleged accomplice in the scheme, Gary Brown Jr., outline in detail for the first time the ways in which Pugh allegedly printed, sold, stashed and resold books ordered by Baltimore buyers for years.
[ Documents: Read the full indictment and plea deals ]
They outline a scheme that has prompted questions from Baltimoreans at least since March, when The Baltimore Sun first began reporting on sums she’d received through her self-publishing enterprise, including $500,000 alone from the University of Maryland Medical System, where she sat on the board of directors.
As The Sun reported one buyer after another this spring — first UMMS, then Kaiser Permanente, Associated Black Charities, CareFirst BlueCross BlueShield, J.P. Grant, the Maryland Automobile Insurance Fund — questions mounted as to whether and how Pugh had fulfilled so many orders for so many books, especially considering she could produce receipts for print runs to supply only a portion of the purchases.
In its own attempts to track the books known to have been paid for, The Sun repeatedly came up short. The numbers didn’t seem to add up.
Now, in Pugh’s indictment and Brown’s plea, federal prosecutors say the numbers never did add up. The books were never printed, at least not in the volumes sold.
In multiple instances, prosecutors allege, Pugh and Brown delivered large volumes of books to the Baltimore City Public Schools, which transferred many of them to a schools warehouse. Then, over the course of years, they would return again and again to the schools, take books and use them for other sales.
In 2010, for example, prosecutors say UMMS agreed to pay $100,000 for 20,000 books. In June 2011, then Sen. Pugh paid a printing company $13,480 to print and deliver 22,110 copies, with 20,020 going to city school administrators at North Avenue and 2,090 going to Pugh’s legislative offices.
Then, that October, Pugh and Brown allegedly arranged for thousands of the books to be removed from the warehouse. In the years to follow, they would allegedly repeat these actions, moving books purchased for school kids to other locations, including her legislative offices, her mayoral office, the War Memorial building, a public storage locker and the cars of Pugh and her aides. Then they would reuse them to fulfill new purchases, or to give out at political events to support Pugh’s career, the indictment alleges.
Sometimes, it claims, Pugh would take orders for books and simply never deliver them.
[ Full coverage: Pugh's 'Healthy Holly' scandal ]
In March 2013, after UMMS had agreed to a second payment of $100,000 for 20,000 books, a delivery of some 18,600 copies of Pugh’s second book, “Healthy Holly: A Healthy Start for Herbie,” was made to city schools, Pugh having skimmed off 1,600 for her legislative office, prosecutors allege.
That December, CareFirst paid $7,500 for 1,000 books, through Associated Black Charities. Brown went to the school system, took the books from the stockpile already paid for by UMMS, and delivered them to Associated Black Charities, which then handed them out to youth-related organizations, prosecutors said.
“Sometimes Brown enlisted the help of other City employees to remove and transport the books," prosecutors said. "On other occasions, Pugh paid associates of Brown to remove and transport the books.”
In 2016, the Frederick Frank Family Trust Foundation gave $50,000 to Associated Black Charities for 5,000 copies of Pugh’s third book, “Healthy Holly: Fruits Come in Colors Like the Rainbow.”
“To fill the book order, Pugh and Brown converted 5,000 copies of Book Three from the shipment of books that UMMS had donated to the school system" as part of a third $100,000 payment to Pugh in August 2015, and “had already been delivered to the city warehouse,” prosecutors said.
At some point, Pugh simply stopped printing books in bulk, they allege, even as she continued collecting huge checks, including a fourth $100,000 check from UMMS and then a fifth.
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Pugh took $100,000 from UMMS and $14,000 from Kaiser Permanente for her fourth book, “Healthy Holly: Vegetables Are Not Just Green,” in 2016 and 2017, prosecutors said, and never delivered the books.
She took another $100,000 from UMMS and $25,000 from Kaiser Permanente for her fifth book, “Healthy Holly: Walking With My Family,” in 2018, prosecutors said, and never delivered the books.
All told, prosecutors say Pugh, through her “scheme to defraud,” collected nearly $770,000 illegitimately, all of which they want her to forfeit to the federal government. They also want to take her house, which they say she also purchased using ill-gotten gains.
While working the alleged shell game of books, prosecutors also allege Pugh took several other illegal steps to make the associated cash work for her, including by disguising the profits she made, avoiding paying taxes on the proceeds, and illegally funneling the funding into her political campaign for mayor.
Pugh has not entered a plea in the case yet. But she has been defiant in the face of questions about her book sales since March.
She has called questions about her book business a “witch hunt,” and said she paid taxes on all the income. Prosecutors say she did not.
Pugh at one point said she never sold books to anyone other than UMMS, only to be called out as misrepresenting her sales by her other customers — who prosecutors now say were scammed.