It also raised further questions regarding the roles of Baltimore City Comptroller Joan Pratt, who co-owned a business with Pugh that prosecutors say was used to launder an illegal campaign contribution and which filed a false tax return, and of a major city contractor who wrote out a check to that business in addition to buying Pugh’s books.
“The chronology of events since 2011 . . . clearly establishes the deliberateness with which [Pugh] pursued financial and political gain without a second thought about how it was harming the public’s trust,” wrote Assistant U.S. Attorneys Martin J. Clarke and Leo J. Wise.
Pugh, 69, was elected mayor in 2016. The Democrat resigned in May after federal agents raided her City Hall office and her houses. She reached a plea agreement in November with prosecutors and is scheduled to be sentenced Feb. 27 in Baltimore.
Prosecutors told the judge that Pugh knowingly sought to defraud purchasers of her “Healthy Holly” books, reap financial and political benefits, and pay little or no taxes. They accused her of compounding an array of problems already facing the city and of feigning an interest in addressing childhood obesity with the books on healthy lifestyles for kids.
At one point they referred to her as a “scammer,” and said the children’s books were intended to woo voters and bolster her campaign coffers. Purchasers told investigators they felt the books advanced the goals of their community outreach programs.
Yet, “many of the purchasers acknowledged that they probably would not have purchased the books if Pugh had not been the author,” prosecutors said.
Steven Silverman, one of Pugh’s attorneys, said his team filed its own sentencing memorandum. It was not available Thursday through the court.
“Ms. Pugh’s defense team strongly disagrees with the government’s sentencing recommendation,” he said. “Our position as to a fair and appropriate sentence will be laid out in a sentencing memorandum which will be made public, pending order of the court.”
With the assistance of longtime legislative aide Gary Brown, prosecutors wrote, Pugh “methodically expanded her illegal scheme and managed to conceal it from state and federal authorities and, most important, the citizens she served.”
When Brown was charged in an earlier case with campaign finance violations, prosecutors said in the new memo, she hired an attorney for him and lied in statements about what she knew about his charges. Brown pleaded guilty in 2017 in state court to funneling campaign donations to Pugh through relatives.
Brown pleaded guilty in the latest case to fraud, conspiracy and tax charges. His attorney, Barry J. Pollack, said Thursday: “We are confident that the court will treat everyone involved fairly and will take great care in determining an appropriate sentence.”
The statement of facts accompanying Pugh’s plea in November described how Pugh defrauded businesses and nonprofit organizations out of nearly $800,000.
Prosecutors said Thursday that Pugh’s “personal inventory” of “Healthy Holly” books never exceeded 8,216 copies. But through a “three-dimensional” scheme, they say, she was able to resell 132,116 copies for a total of $859,960. She gave another 34,846 copies away.
“Corporate book purchasers with an interest in obtaining or maintaining a government contract represented 93.6% of all Healthy Holly books or $805,000,” prosecutors said.
Prosecutors also noted Pugh did not disclose her financial interests while in the Senate before becoming mayor, as required by Maryland law. After the Baltimore Sun reported in March that Pugh did not disclose her $500,000 business relationship with the University of Maryland Medical System while on its volunteer board, she amended seven years of reports to the state ethics commission.
Pugh also sold books to big holders of city contracts, including Kaiser Permanente and Associated Black Charities, the Sun found.
The book sales were used to bolster the financial health of Pugh’s campaign, prosecutors say, but there were other payments that had nothing to do with “Healthy Holly.”
Pugh defeated former mayor Sheila Dixon in 2016 in the Democratic primary for mayor and again in the general election after Dixon mounted a write-in campaign. Dixon is running again for mayor in an April 28 primary.
Dixon left the office of mayor herself in 2010 after being found guilty of embezzling gift cards meant for poor people.
Talia Richman contributed to this report.