Federal prosecutors have charged former Baltimore Mayor Catherine Pugh with 11 counts of fraud, tax evasion and conspiracy.
Former Baltimore Mayor Catherine Pugh used hundreds of thousands of dollars she made double-selling her self-published “Healthy Holly” children’s books to fund straw donations to her 2016 campaign and buy herself a bigger house right after she was sworn in, court documents allege.
The Baltimore Sun revealed this year that Pugh collected nearly $800,000 by selling her Healthy Holly books to various entities, including a hospital system she helped oversee and a health insurer that does business with the city. Roughly half of the money came from a deal with the University of Maryland Medical System, which was told the books would be distributed to city schoolchildren.
Printing and delivering the books cost only a fraction of what Pugh collected. So for months, as Pugh dealt with the fallout from the revelations and ultimately resigned, it wasn’t clear where all the money went.
The newly released court documents stemming from FBI and IRS investigations of Pugh allege she never printed enough books to fulfill the many payments she received. Instead, according to an indictment of Pugh by a federal grand jury in Baltimore and a plea agreement involving aide Gary Brown Jr., she in some cases sold the same books to multiple purchasers and failed to deliver them to the intended recipients.
The purpose of her actions, the indictment states, was to unlawfully enrich herself, promote her political career and fund her 2016 mayoral campaign. Pugh has been charged with 11 counts of fraud, tax evasion and conspiracy in the case; her attorney, Steven Silverman, declined to comment Wednesday.
As early as 2011 she was using book money for her benefit, according to the indictment. In October of that year, CareFirst BlueCross BlueShield agreed to buy $7,000 worth of Healthy Holly books. To fill the order, court documents state, Pugh took 1,000 copies that the medical system had already paid for and resold them to CareFirst. Pugh used $6,000 from the CareFirst sale to pay down a line of credit on her Ashburton home in Northwest Baltimore, according to the documents.
Five years later, as then-state Senator Pugh ran in the April 2016 Democratic mayoral primary, she and Brown allegedly started talking about how to increase the number of her donations before campaign finance reports became public. They believed the candidate known to have the most money ahead of the primary would have the best shot at the mayorship.
“Pugh and Brown decided to inflate the amount of total contributions by secretly contributing Pugh’s own money to the campaign,” court documents state. They believed that “if voters learned that Pugh had injected her own money into the campaign, she would appear desperate" and that would hurt her election chances.
They used Healthy Holly funds to pay for straw donations totaling about $35,800, according to the documents. The contributions were made in the names of Pugh’s friends, family and associates, including her administrative assistant in the Senate.
After winning the primary, according to the indictment, she told a campaign donor in October 2016 that she wanted to buy a larger house so she could entertain more people as mayor. The donor, identified only as Purchaser G in the indictment, asked how he could help, and Pugh said he could write a $100,000 check to Healthy Holly.
Purchaser G’s transactions mostly align with those acknowledged by J.P. Grant, the Columbia-based financier who frequently does business with the city. Grant did not respond Wednesday to a request for comment.
The donor wrote the check, putting “book donation” in the memo. The man “understood from Pugh’s representations to him that Pugh would use the money to produce and distribute Healthy Holly books, with the balance of the money going toward the purchase of a new house,” according to the indictment.