Pugh, 69, was the second Baltimore mayor to leave office in the past decade while facing corruption allegations.
Prosecutors accuse Pugh of running a sham business dating to 2011, when she was a state senator and before her days overseeing Maryland’s largest city. She is accused of ripping off nonprofit organizations and taxpayers by accepting payments for tens of thousands of books she never intended to deliver. Pugh used the money, according to court papers, to fund her mayoral bid and to buy and renovate a house in Baltimore.
Pugh churned book sales and replenished her inventory by selling the same volumes multiple times, prosecutors said, including taking back books intended as donations to Baltimore school students. Most of the books, stashed at locations throughout the city, were marketed and sold directly to companies and foundations that did business or tried to get business with the state and city of Baltimore, prosecutors allege.
Maryland U.S. Attorney Robert K. Hur, in a news conference along with top officials from the FBI and Internal Revenue Service, called Pugh’s alleged actions a “betrayal of the public trust,” adding that “the victims are all of us.”
“This is a tragedy and the last thing that our city needs,” Hur said.
The charges come after searches in April of Baltimore City Hall, Pugh’s homes and a nonprofit tied to her. Federal agents sought financial documents and other information related to almost $800,000 she allegedly was paid for the books, an enormous amount in the world of children’s literature.
Pugh’s attorney, Steven D. Silverman, said the former mayor plans to present herself to authorities at the start of her court hearing. Silverman declined to comment on the charges.
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 unsealed Wednesday show.
Pugh, a state lawmaker for more than a decade, was elected mayor in 2016. Her downfall stunned friends and supporters and was another blow to the city struggling with ongoing violence and scarred by 2015 riots after the death of Freddie Gray from an injury in police custody.
Last week, the city recorded its 300th homicide for the fifth consecutive year. The grim numbers threaten to once again leave Baltimore with the highest or near the highest homicide rate in the country.
The breadth and scope of the alleged corruption dismayed Democratic political leaders, who said it erodes their ability to advocate for Baltimore and further undermines residents’ trust in leaders trying to guide the beleaguered city to a better place. Pugh came in as mayor in part after portraying herself as a candidate with more integrity than former Baltimore mayor Sheila Dixon, who resigned as part of a plea deal for stealing gift cards meant for the poor.
“This news is going to make it just that much harder for us,” said Sen. Antonio L. Hayes, the Baltimore Democrat elected to the seat Pugh previously held. The scandal, he said, “has thrown our political system into a tailspin. It’s provided instability in the mayor’s office, and it’s trickled down.”
Gov. Larry Hogan (R) said in a statement that “the people of Baltimore, and all Marylanders, should be able to have confidence in the honesty and character of the people they elect to office. It is completely unacceptable anytime a public official violates the public trust.”
Three years ago, state investigators began scrutinizing donations to Pugh’s mayoral campaign. That led federal investigators in early 2017 to payments made to Pugh for her book series, which follows an African American girl, Holly, and is aimed at promoting a healthy lifestyle.
In March, the Baltimore Sun first reported that Pugh received $500,000 from the University of Maryland Medical System for a total of 100,000 books beginning in in 2011, when Pugh served on a state Senate committee that partially funded the private hospital network — and was on its board.
Pugh resigned from the board, on which she had served for 18 years. She returned $100,000 for a shipment of books she said was not completed.
In all, court records show, Pugh took purchase orders for roughly 124,000 books but had printers produce only 63,210.
Hur suggested Wednesday that investigators were continuing to look at book buyers who would have been aware the purchases amounted to a bribery scheme. The indictment states that one buyer, the owner of a company that did business with the city, knew money he paid Pugh for books would not go in full to the school system but would instead be diverted to her campaign — and to help Pugh buy a new house.
When asked whether additional indictments would be forthcoming or if some bought books expecting a direct benefit or to leverage Pugh’s influence in return, Hur said he could not comment beyond saying, “All very interesting questions but not ones that I can answer at this point. We look forward to telling more in court.”
Pugh was hospitalized with pneumonia for five days in late March and took an indefinite leave April 1. She never returned to her job at City Hall.
Longtime City Council President Bernard C. “Jack” Young was elevated to acting mayor and has served as mayor since her resignation. Young plans to run for mayor in the 2020 election.
The 11-count indictment handed up by a grand jury last week and unsealed Wednesday charges Pugh with conspiracy to commit wire fraud, seven counts of wire fraud, conspiracy to defraud the United States and two counts of tax evasion.
Brown’s lawyer, Barry Pollack, said in a statement that Brown “regrets his role in this matter, has resolved the charges against him, and trusts that the court process will treat everyone involved fairly.” Brown signed a plea deal Nov. 5.
Wedington’s attorney, Brandon R. Mead, said his client has “taken ownership of the allegations against her.” She agreed to help Brown because he offered her a way to repay outstanding student loan and health-care debts, for which her wages were being garnished.
“She was presented a way out by Mr. Brown, and unfortunately she took advantage of that,” Mead said Wednesday. Wedington, who signed a plea deal Sept. 20, “looks forward to making amends,” which includes paying back taxes.
All three face the possibility of lengthy prison sentences.
Prosecutors allege the scheme spanned the period in which Pugh held leadership positions in the Maryland Senate. She was elevated to majority leader in 2015.
When Pugh was elected mayor the next year, Brown was designated 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.
Pugh is accused of writing “Healthy Holly checks” to Brown, which he cashed before returning the money to Pugh to fund straw donations to her election committee.
Though Brown didn’t move to a state seat, Pugh kept him on the staff at City Hall, where he had an office on the same floor as the mayor’s and sometimes worked on promoting and selling her books, according to Brown’s plea agreement.
According to his agreement, the pair diverted money in three ways.
Brown admitted that they promised to fill book orders but kept the purchase money and didn’t provide the books.
In other cases, his plea states, they provided books to purchasers, but skimmed some for Pugh’s use at public appearance and campaign events.
They also plucked books from storage from an inventory bought and donated for use by schoolchildren.
Starting in 2011, for instance, Brown’s plea states that Pugh began negotiating initial 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 Brown’s admission.
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, the plea papers show.
Prosecutors also allege Pugh evaded taxes on her books sales and underreported her income, paying $4,168 in taxes, not the $102,444 the government said she owed for 2016 — the year she was elected Baltimore mayor.
Erin Cox, Ian Duncan and Rachel Chason contributed to this report.