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Former Baltimore Mayor Catherine Pugh sentenced to 3 years for ‘Healthy Holly’ children’s book fraud scheme

Catherine Pugh, the former mayor of Baltimore who was sentenced after pleading guilty to federal charges, speaks publicly.

Former Baltimore Mayor Catherine Pugh, who held elected offices in Baltimore for two decades and was elevated by voters to lead the city after the upheaval of 2015, was sentenced to three years in federal prison Thursday for a fraud scheme involving a children’s book series.

U.S. District Judge Deborah K. Chasanow described Pugh’s crimes as “astounding” and said she took advantage of a career spent doing good works to mislead organizations who purchased her “Healthy Holly” books.

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“I have yet frankly to hear any explanation that makes sense," the judge said. "This was not a tiny mistake, lapse of judgment. This became a very large fraud. The nature and circumstances of this offense clearly, I think, are extremely, extremely serious.”

Pugh, 69, tearfully asked Chasanow for mercy and apologized in court “to anyone I have offended or hurt through my actions.” She said she had “turned a blind eye” and “sanctioned things I should not have," but did not intend to cause harm.

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Pugh isn’t being imprisoned immediately. Chasanow said Pugh would have to report no later than mid-April.

Outside the courthouse, Pugh spoke to reporters for the first time since leaving office and struck a resilient tone, declaring: “This is not the last you’ll see of Catherine Pugh.”

Pugh’s political fall began in March when The Baltimore Sun revealed she had entered into a no-bid deal with the University of Maryland Medical System, where Pugh sat on the board of directors, to buy 100,000 copies of her sloppily self-published “Healthy Holly” books for $500,000. She later resigned from the board and as mayor amid multiple investigations into her finances and the book sales. In total, she netted more than $850,000, prosecutors say.

At the same time, she failed to print thousands of copies, double-sold thousands more and took many others to use for self-promotion, according to prosecutors. Investigators also uncovered that she laundered illegal campaign contributions and failed to pay taxes.

Assistant U.S. Attorney Martin Clarke, the lead prosecutor on the case, said Pugh “deliberately and cunningly set out to deceive people” and to “rig an election to her advantage and cover it all up," referring to the 2016 Democratic mayoral primary.

Chasanow ordered Pugh to pay restitution of $400,000 to the medical system and nearly $12,000 to the Maryland Auto Insurance Fund, which also paid Pugh for books. She will have to forfeit nearly $670,000, including her Ashburton home and $17,800 in her campaign account. Also, Pugh agreed that all of her copies of “Healthy Holly” books, collected by the FBI in raids on her houses and offices, will be destroyed.

The judge spoke of the deterrent Pugh’s sentence could serve for other elected officials.

“I disagree that the length of the sentence has no impact on others out there who might be thinking about using or abusing their positions of trust,” Chasanow said.

U.S. Attorney Robert Hur also addressed the issue of public trust, saying Pugh’s crimes undermine “everyone’s faith in government and what government can do for the people."

After the sentence was handed down, Pugh stood and appeared stunned and forlorn. Supporters came to the courtroom floor to console her.

The sentence fell between prosecutors’ request for nearly five years and the defense request a year and a day in prison. In addition to a three-year prison sentence, Chasanow sentenced Pugh to three years of probation.

Pugh’s attorney, Steve Silverman, called the sentence fair, and said he thinks the former mayor ultimately won’t serve more than 18 months in prison under the new First Step Act, which seeks to reduce the federal prison population.

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Erin Murphy, a partner of Silverman’s, said Pugh would be eligible for a pilot program in the act for older, nonviolent prisoners who don’t pose a threat to the community. That could result in a release to home detention after serving two-thirds of her sentence. In addition, Murphy said, her time in a federal institution could be further reduced by credits for good behavior.

Thursday’s hearing was held in the federal courthouse’s large ceremonial courtroom, and every seat was taken by her supporters, members of the media and other observers. Behind the prosecution table sat a dozen federal agents who worked on the case, an unusually large showing.

Pugh had more than 70 people wrote letters to Chasanow on her behalf. They included a slew of prominent pastors, former Democratic Mayor Kurt Schmoke, former Democratic U.S. Rep. Kweisi Mfume and Morgan State University President David Wilson.

Prosecutors responded in court to the letters, telling Chasanow: “Ms. Pugh did not have a momentary lapse of judgment, as many of her supporters have argued.”

Clarke painted Pugh as a deceptive and calculating person who led purchasers of the book to believe it was a nonprofit venture even as she reaped profits of 80% to 100% and used government resources to cover her tracks. He played a video of a 2017 news conference for the kickoff of a citywide book drive, at which “Healthy Holly” books appeared to have been prominently placed.

Chasanow said she had received victim impact statements from the medical system and the Maryland Auto Insurance Fund. A spokeswoman for the U.S. Attorney’s office said the letters were part of a sealed presentence investigation and could not be released.

Silverman questioned whether the University of Maryland Medical System was a victim in the case. The Sun reported in March that nearly a third of the UMMS’s board members had business with the hospital network, a point Silverman raised in court. He said one board member made nearly $1 million “on a can’t-figure-out-what-he-did consulting agreement.”

“Catherine Pugh was wrong, she should have known better, she was better than this. But she got sucked into the culture of what was going on with the UMMS board — that everyone had an opportunity to do business,” he said.

UMMS and the Maryland Auto Insurance Fund declined Thursday to comment on the case.

Silverman said Pugh took responsibility as soon as she could for what she had done. Shortly after the scandal broke, Pugh was hospitalized with pneumonia and Silverman had described her as “not lucid” after she took leave from her duties as mayor.

“She was completely incapacitated," Silverman said. "But as soon as she was able, in late April, she made the decision to resign.”

Pugh’s attorneys alluded to a heavy psychological toll on the former mayor, and one of her brothers wrote Chasanow a letter in which he said she “has not eaten or slept properly since these tribulations have unfolded.”

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As The Sun began reporting on the book sales, Pugh began publicly telling lies, including how much profit she was earning from the books and who she was selling them to.

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“The chronology of events since 2011, comprising Pugh’s seven-year scheme to defraud, multiple years of tax evasion, election fraud, and attempted cover-ups, including brazen lies to the public, clearly establishes the deliberateness with which she pursued financial and political gain without a second thought about how it was harming the public’s trust,” Clarke and fellow Assistant U.S. Attorney Leo J. Wise wrote in a memo to the judge.

Pugh won a seat on the Baltimore City Council in 1999. She joined the House of Delegates in 2005, and rose to the state Senate two years later. In the Senate, she served as majority leader for two years.

Along the way, she racked up a number of achievements, including helping to open the Baltimore Design School and establishing the Baltimore Marathon. Pugh gained greater prominence during the 2015 unrest that followed the death of Freddie Gray, when she walked the streets trying to calm tensions and urging young men to return to their homes. She won the primary the following year by two percentage points.

As mayor, she won praise for removing Confederate-era monuments and creating a new Neighborhood Impact Investment Fund, among other initiatives.

In court, Silverman recounted Pugh’s accomplishments, saying her life has been “dedicated to the empowerment of the black community and youth” and her aim to “elevate minorities to a level playing field and promote racial harmony.”

Also pleading guilty following the Pugh investigation were her aide, Gary Brown Jr., and Roslyn Wedington, director of a nonprofit Pugh championed. In court Thursday, prosecutors described Brown as Pugh’s “minion.” They have said Pugh had Brown making “Healthy Holly” book deliveries during his working hours as her legislative aide, and he then carried out straw campaign donations using money from the books. When Brown found himself in legal trouble, Pugh connected him with a lawyer and publicly feigned ignorance about the source of the funds, prosecutors said.

Sentencing hearings have not yet been scheduled for Brown and Wedington. No one else has been charged in the case.

Pugh also has been charged in state court with perjury. The Office of the State Prosecutor alleged Pugh broke the law by failing to disclose her Healthy Holly business on financial disclosure forms during her time as a state senator. A trial is scheduled for May 14 in Anne Arundel County Circuit Court.

Baltimore Sun reporter Lillian Reed contributed to this article.

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