:quality(70)/arc-anglerfish-arc2-prod-tronc.s3.amazonaws.com/public/FH7XPTEOIRDRJBTGUNOO7S7TXI.jpg)
Former Baltimore Mayor Catherine Pugh has been indicted on 11 criminal counts related to the sales of her “Healthy Holly” children’s books. In addition, a longtime aide and another associate have pleaded guilty to another 10 charges combined — some related to Pugh’s alleged book scheme, others to an accusation in a separate tax evasion at a nonprofit job training center.
Pugh’s indictment and the plea deals of Gary Brown Jr. and Roslyn Wedington outline an extensive web of alleged and acknowledged wrongdoing — with prosecutors outlining multiple accusations of fraud.
[ Documents: Read the full indictment and plea deals ]
Catherine Pugh
Pugh, 69, is charged with one count of conspiracy to commit wire fraud, seven counts of wire fraud, one count of conspiracy to defraud the United States, and two counts of tax evasion. All of the charges have to do with allegations regarding the sales of her books: that she sometimes did not supply books as purchased; that she fraudulently funneled money from those sales into her 2016 mayoral campaign, and that she failed to acknowledge the vast sums of money she was pocketing or pay taxes on them.
The charges against Pugh stem from an investigation that became public after The Baltimore Sun reported beginning in March that Pugh collected more than $800,000 from sales of her self-published books. She sold 100,000 copies for $500,000 to the University of Maryland Medical System, where she sat on the board, and struck lucrative deals with other entities with business before the city, including Associated Black Charities and health insurer Kaiser Permanente.
The scandal surrounding those sales, which Pugh failed to properly disclose, and subsequent FBI and Internal Revenue Service raids forced Pugh to resign as mayor, although she called questions about the transactions a “witch hunt” and claimed she appropriately accounted for all sales in her tax filings.
The indictment said otherwise. According to federal prosecutors, Pugh “promised to print and deliver books commensurate with what purchasers paid for them when, in truth and fact, [she] accepted payments with the intent to (1) not provide the books to purchasers, (2) print and provide the books to purchasers, but later convert the books to her own personal use, and (3) provide purchasers with books that had already been sold and delivered to a different purchaser.” She “intentionally double sold” the books, the indictment states.
She then funneled the funding she obtained through the scheme, according to the indictment, into her 2016 campaign for mayor through straw donors, with the help of Brown, and to buy a new home for herself. Often the supposed recipients of the donations, such as Baltimore school students, never benefited from the deals, according to the indictment.
In part because she was selling books more than once, she never printed all the books she sold, the indictment states. It says she funneled some of the money out of the Healthy Holly bank accounts by writing checks to a consulting company formed by Brown, claiming them as business expenses, including to her accountant. Brown then used the funds to make straw donations to Pugh’s campaign, the indictment states.
As Pugh was taking in hundreds of thousands of dollars, she was not properly accounting for the funds in her tax filings, according to the indictment. In just one alleged example in 2016, Pugh reported her taxable income was $31,020, when it was really $322,365, according to the indictment.
Pugh’s attorney, Steve Silverman, declined to comment Wednesday morning, saying “he will address this matter in open court tomorrow.”
Gary Brown Jr.
Brown, 38, a longtime aide to Pugh, pleaded guilty to four criminal counts: one for conspiracy to commit wire fraud, one for filing a false tax return, and two for conspiring to defraud the United States. Of the latter two charges, one is related to his work with Pugh, while the other is related to his work with Roslyn Wedington, the executive director of a nonprofit training center for which Pugh served as board chairwoman.
Brown was a legislative aide for then-state Sen. Pugh from 2011 to 2016. He served as a campaign aide during her 2016 run for mayor. After she won, the city hired him as deputy director of special events in the mayor’s office.
According to his plea deal with federal prosecutors, Brown began conspiring with Pugh within months of starting as an aide in her Senate office.
“From in or about November 2011 until in or about March 2019, Brown and Pugh participated in a scheme to fraudulently sell and distribute tens of thousands of Healthy Holly books,” the deal reads.
Brown’s plea deal also states Brown assisted Pugh in making donations of her money from the fraudulent sales of her books to her mayoral campaign through straw purchasers, in part because the two of them wanted Pugh to look like she had a lot of support but felt that Pugh donating openly to herself would make her seem “desperate.”
So, according to the deal, Pugh wrote checks to Brown from her Healthy Holly business account. Brown took the checks and cashed them at a teller’s window, “thereby acquiring untraceable cash.” Brown then used that cash “to fund money orders, debit cards and personal checks in the names of straw donors,” the deal states.
Barry J. Pollack, an attorney for Brown, said Brown “regrets his role in this matter, has resolved the charges against him, and trusts that the court process will treat everyone involved fairly.”
In 2017, Brown pleaded guilty to a state campaign finance charge after the Office of the State Prosecutor found he used relatives’ bank accounts to donate $18,000 to Pugh’s 2016 mayoral campaign. Pugh stood by him, giving him a job in her administration and calling him a “good employee.” Brown’s most recent salary with the city was $62,220.
According to the new, federal plea deal, Pugh wrote checks in the names of the alleged straw donors, writing “returned contribution” on the memo line of each of the checks. But none of the money went to the individuals named. Instead, Pugh directed Brown to use the money for his criminal defense and “state authorities were unable to identify Healthy Holly as the source of the funds for the straw donations.”
Apart from his dealings with Pugh, Brown pleaded guilty to assisting Wedington in a scheme to avoid her paying federal taxes on income at the Maryland Center for Adult Training, a nonprofit organization where Pugh long served on the board, and which was raided by FBI and Internal Revenue Service agents in April, along with Pugh’s homes and City Hall office. Brown was also on the board of MCAT.
According to Brown’s plea deal, he helped Wedington avoid having her pay as MCAT’s executive director garnished to pay student loans and medical bills by removing her from the payroll, and cutting her checks or giving her cash instead. He also prepared her taxes from 2013 to 2017, a period when Wedington failed to claim her $80,000 salary and did not pay taxes, according to their plea deals.
Roslyn Wedington
Wedington, 50, pleaded guilty to one count of conspiracy to defraud the United States, and five counts of filing false tax returns. According to her plea deal, she “knowingly filed false tax returns" each year from 2013 to 2017.
According to the plea deal, Wedington had part of her salary from MCAT garnished in 2013 to repay debts. To avoid such garnishments moving forward, she asked Brown to move her “off payroll" at MCAT and instead funnel money directly to her.
According to the deal, Brown directed MCAT’s payroll provider to pay him the amount of Wedington’s salary — more than $80,000 — as an independent contractor and he then gave the money to Wedington in cash. Starting in 2015, Brown gained authority to write checks from MCAT bank accounts, and starting writing Wedington checks directly.
Maryland Policy & Politics
“Thus, Wedington avoided having her MCAT salary go through her bank account, where it could be garnished, and also avoided having any funds withheld for tax purposes," according to the plea deal.
Along the way, she claimed unemployment insurance pay, and some income from a separate consulting gig, but never claimed the pay she was receiving from MCAT to federal tax authorities. During the period in question, the plea deal states, Wedington should have paid more than $120,000 in taxes.
Brandon Mead, an attorney for Wedington, said she regrets her actions.
“Ms. Wedington has been an incredibly hard worker. She unfortunately got put in a situation that many Americans face today, where she was behind on student loans, behind on health care debt, and she unfortunately made some wrong decisions,” he said. “She’s taken full ownership of those decisions and looks forward to putting this behind her, and looks forward to continuing to be an upstanding citizen of Maryland.”
He declined to comment further.
The charges are not Wedington’s first. In 2004, she pleaded guilty in Baltimore Circuit Court to stealing more than $850,000 while working as a bookkeeper and secretary for Dr. Ernest Colvin, a prominent Park Heights dentist who died in 2015.
Sentencing hearings for Wedington and Brown had not been scheduled as of Wednesday.