Former Baltimore mayor Catherine E. Pugh pleaded guilty Thursday to fraud-and-tax-evasion conspiracies to illegally hide profits from sales of her children’s books to enhance her political and personal fortunes.
Pugh’s acknowledgment of guilt came during a court hearing in Baltimore, where the disgraced 69-year-old once led Maryland’s largest city.
Her appearance followed by a day the unsealing by the U.S. Attorney’s Office for Maryland of an indictment against Pugh following a three-year investigation into sales of the Healthy Holly book series that began when she was a state senator representing Baltimore in Annapolis.
Sitting between her two lawyers, and with her voice muffled, Pugh did not hesitate when she answered guilty to four of the 11 charges against her.
U.S. District Judge Deborah Chasanow asked how she was feeling.
“Anxious,” Pugh answered.
“I’m not surprised,” the judge responded before later setting Pugh’s sentencing for late February.
Outside the courthouse, Maryland U.S. Attorney Robert K. Hur said Pugh’s admissions in court demonstrate that “she betrayed the trust placed in her by the public.”
“The city of Baltimore faces many pressing issues,” he said. “We need dedication and professionalism from our leaders not fraud and corruption if we have any hope of fixing these problems.”
Hur did not immediately have details on a sentencing range Pugh faces.
Pugh and her attorneys declined to comment as the former mayor was whisked away in a black Suburban.
Authorities in April searched Baltimore City Hall, Pugh’s homes and a nonprofit tied to her, seeking financial documents and other information related to almost $800,000 she allegedly was paid for her self-published books.
Following the searches, Pugh, a Democrat elected in 2016, took an indefinite leave as mayor and never returned to her job at City Hall. She resigned in May, with longtime City Council President Bernard C. “Jack” Young elevated to acting mayor.
Pugh admitted Thursday to running a sham business dating to 2011 that she used to sell her books in schemes that involved skimming part of customers’ paid orders for her own promotions and also churning sales by reselling books that already had been purchased but not delivered or that were being held in storage.
The conspiracy Pugh acknowledged includes using $35,800 from book sales as illegal straw donations to her mayoral campaign. She also used some of the money to buy and renovate a house in Baltimore. The two tax evasion counts include underreporting what Pugh owed on sales of her “Healthy Holly” series that turns on an African American girl, Holly, as she follows a healthy lifestyle.
Most of the books in Pugh’s transactions were marketed and sold directly to nonprofit organizations and foundations, many of which did business or tried to get business with the state and city of Baltimore.
Among the books diverted and resold, were thousands purchased and donated for use by Baltimore public students.
In all, court records show, Pugh took purchase orders for roughly 124,000 books but had printers produce only 63,210.
Two former Baltimore employees, Gary Brown Jr., 38, a longtime Pugh aide who worked at City Hall, and Roslyn Wedington, 50, who ran a nonprofit linked to the case, have pleaded guilty to conspiracy to defraud the United States and to filing false tax returns, court papers show in cases also unsealed Wednesday.
The revelations about the books deals first became public in March when the Baltimore Sun reported Pugh had received $500,000 from the University of Maryland Medical System for a total of 100,000 books, when she served on a state Senate committee that partially funded the private hospital network — and on its board.
The relationship between Pugh and Brown dates to 2011, when Brown was Pugh’s legislative aide in the state Senate. When Pugh was elected mayor the next year, Brown was tapped to fill a vacancy in the House of Delegates. The morning Brown was scheduled to be sworn in, state prosecutors charged him with campaign finance violations tied to Pugh which — Brown admitted in his plea unsealed Wednesday — were funneled through Healthy Holly sales. Brown’s swearing-in was canceled, and he pleaded guilty.
After he got in trouble, Pugh directed Brown to cash five checks totaling $18,000 to pay his legal fees at a law firm Pugh picked because she says “the attorney there would take care of him,” according to Pugh’s indictment.
The pair remained close and as mayor kept Brown on staff at City Hall, where his office was on the same floor as hers.
Starting in 2011, Pugh admitted to conspiring with Brown to negotiate deals with the University of Maryland Medical System for a total of $300,000 for 60,000 copies of three Healthy Holly books — “Exercising is Fun;” “A Healthy Start for Herbie;” and “Fruits Come in Colors Like the Rainbow.” The sales were contingent on the books being donated and distributed to Baltimore schoolchildren.
The schools chose not to use the books as part of the curriculum — the books had grammar and spelling errors that needed to be corrected.
The school system moved the books to a warehouse for possible distribution to students but Pugh and Brown later arranged to remove thousands from that stash, sometimes using city employees, according to admissions from Brown and Pugh.
The pair took those books, and others already diverted, and used Associated Black Charities, a Baltimore-based public charity, “to facilitate the resale and distribution of the books to new purchasers.”
Neither the medical system nor the charity “knew that Pugh and Brown were double selling the books,” according to Brown’s guilty plea.
Pugh stored the books at various locations — at her house, government offices in the state legislature and in Baltimore, in the mailroom and a warehouse of the Baltimore school’s system and vehicles owned by the city, court paper show.
During the year she was elected mayor, prosecutors also allege Pugh admitted she evaded taxes on her books sales and underreported her income, paying $4,168 in taxes, when she owed the government $102,444.
After Pugh’s court hearing Thursday, a few residents expressed frustration with the corruption in the city. After Hur, the U.S. attorney, gave a statement to news media outside the courthouse and opened the floor to questions, a member of the public interjected: “are you going after other appropriate officials here in Baltimore city because Mayor Pugh ain’t the only one who committed crimes here.”
Hur responded that he and federal officials “share your concern. We share the commitment to public integrity.”