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Former investigator files complaint against Baltimore Mayor Pugh with Maryland prosecutor over 'Healthy Holly'

James Cabezas, a former investigator for the prosecutor’s office, filed a complaint against Baltimore Mayor Pugh with Maryland State Prosecutor alleging that Pugh deliberately did not report her Healthy Holly company in annual disclosure forms when she was a state senator.

A retired public corruption investigator filed a complaint Monday with the Maryland State Prosecutor against Baltimore Mayor Catherine Pugh, alleging she deliberately did not report her Healthy Holly company in annual disclosure forms when she was a state senator.

James Cabezas, a former investigator for the prosecutor’s office, wrote in his complaint that Pugh must have known she was required to report the children’s book company because she disclosed two other businesses in forms filed with the State Ethics Commission.

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Omitting information on mandatory disclosure forms can result in perjury charges, if prosecutors can prove that government employees or elected officials knew they were required to report business interests and did not, Cabezas stated in his complaint.

Former Baltimore County Schools Superintendent Dallas Dance was convicted last year by the state prosecutor’s office for lying on similar disclosure forms filed with the school district about money he received from a contractor that did business with the school system.

Pugh’s reporting on state disclosure forms that she owns a “secondhand clothing store which trades as 2 Chic Boutique is evidence that she has the knowledge and experience to disclose her Healthy Holly LLC on her financial statement,” Cabezas wrote in his complaint.

Her use of the Healthy Holly company to sell a series of children’s books about health to the University of Maryland Medical System, where Pugh was on the board, “compels me to request an investigation of alleged perjury and the common law crime of criminal misconduct in the form of nonfeasance,” the complaint said.

Nonfeasance is “omitting to do an act which is required by the duties of the office,” according to Maryland law.

Maryland State Prosecutor Emmet Davitt could not be reached for comment.

Gregory Tucker, an adviser to Pugh, said the mayor's personal lawyer, Steven D. Silverman, is handling “this matter and all matters pertaining to the mayor's private business dealings.”

In an email, Silverman said, “Neither the mayor nor I have received notice of a complaint or an actual complaint from the Maryland State Prosecutor’s Office. I cannot comment on something I have not seen, nor do I have any indication a complaint was filed.”

Since The Baltimore Sun reported that the mayor and other medical system board members received contracts from UMMS worth millions of dollars, state lawmakers have been vocal in raising concerns about the appearance of conflicts of interest. Three board members, including Pugh, resigned from the board last week. UMMS CEO Robert Chrencik and four other board members were placed on temporary leave while the medical system reviews its contracting policies.

The medical system paid Pugh $500,000 since 2011 for 100,000 copies of her Healthy Holly books. The books were purchased in the years 2011, 2013, 2015, 2017 and 2018, according to the medical system and Pugh.

A review of the financial disclosure forms Pugh filed with the State Ethics Commission while she was a state senator and since the deal began showed Pugh did not report her Healthy Holly company or its deal with the medical system. She had previously reported that she served on the board of UMMS and that she was involved in two businesses, 2 Chic Boutique and Catherine E. Pugh & Co.

Disclosure forms are submitted “under penalty of perjury,” meaning that those who file them affirm the information they provide is accurate.

After The Sun questioned her two weeks ago about the omissions, Pugh filed amendments for seven years of the disclosure forms to include the Healthy Holly company and its sale of books to the medical system. She also returned $100,000 to the medical system.

Before becoming mayor in December 2016, Pugh served in the General Assembly. Starting in 2007, she was a member of the Senate Finance Committee and in 2013, she became chairwoman of its health subcommittee, which oversees many issues related to the medical system.

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Cabezas, who retired two years ago, worked on Maryland public corruption cases for more than three decades. He said he believes the facts of Pugh’s case are similar to those involving Dance, the former Baltimore County schools chief.

Dance was convicted last year on four criminal counts of perjury after lying on his financial disclosure forms to “cover up income he received from a Chicago-based company with which the school district was doing business,” according to the state prosecutor’s office. Dance pleaded guilty to the charges last March in Baltimore County Circuit Court and was sentenced to five years with all but six months suspended, two years of supervised probation and 700 hours of community service.

The state prosecutor’s office handles complaints about possible violations of election and corruption laws by government and elected officials. It received 102 complaints of corruption last year and has previously convicted former Baltimore Mayor Sheila Dixon and Anne Arundel County Executive John Leopold, forcing both to resign. Cabezas was an investigator on both of those cases, which he detailed in a recently published memoir.

The Sun has reported that Pugh did report her interest in Healthy Holly LLC on the two financial disclosure forms she has filed with the Baltimore Board of Ethics since she became mayor.

But those forms do not disclose her board seat at the medical system and that her company has done business with UMMS.

Officials are required to disclose board seats and any relationships they have with entities that conduct business with the city.

City Solicitor Andre Davis and a Pugh spokesman said the mayor was not required to disclose that information in this case because contracts the city made in 2016 and 2017 were with University of Maryland Medical Center and its Midtown Campus, rather than with the overall medical system.

When amending her state Senate disclosure forms two weeks ago, Pugh listed Healthy Holly LLC, which she incorporated in January 2011. That was the same year she began the sales to the medical system. Pugh stated that the “University of Maryland Medical System purchased books to be given out to the Baltimore City School System,” distributing them in 2012, 2013 and 2015.

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At the same time, the mayor also had to correct disclosure forms she filed with the Maryland Health Services Cost Review Commission. All board members of nonprofit hospitals in Maryland are required to file those conflict-of-interest disclosures.

“UMMS purchased 20,000 ‘Healthy Herbie’ books by a third party and $100,000 was my profit,” stated her 2013 report. Four years later in 2017, Pugh reported the medical system “purchased 20,000 ‘Healthy Holly’ books through a third party and $100,000 was my profit.”

The mayor this month amended the information she provided on those forms.

“The net profit to my company after illustration, printing and shipping costs amounted to approximately $20,000 in each of the [five] years that the University of Maryland Medical System purchased the books,” she said. “The gross revenue of $100,000 listed as ‘profits’ in my board disclosure was incorrect.”

Whether the Maryland state prosecutor decides to pursue Cabezas’ complaint, the veteran investigator acknowledged to Davitt, his former boss, the strange twist of him filing the type of complaint he used to investigate.

“I never thought that after handling thousands of incoming complaints that one day I, too, would become a complainant,” he wrote.

Cabezas wasn’t the only person calling for a criminal investigation. Anne Arundel County Del. Sid Saab, a Republican, posted Monday a letter on Facebook to Maryland Attorney General Brian Frosh, asking “that the office of the attorney general open a criminal investigation of the University of Maryland Medical System board members that recently resigned or have taken a leave of absence.”

A spokeswoman for Frosh said, “Our office does not confirm or deny the existence of investigations.”

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