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Local attorneys wait to see full scope of Pugh’s legal woes

With new information about Mayor Catherine Pugh’s book deals with nonprofits and businesses coming to light daily and one investigation underway, Baltimore attorneys cautioned Wednesday that it was unclear what, if any, laws may have been violated and that Pugh enjoys the presumption of innocence.

Pugh, who took a leave of absence Tuesday while dealing with health concerns, is currently under scrutiny for accepting roughly $700,000 from nonprofits and businesses — some doing business with the city and others affected by city and state governmental policies — for her “Healthy Holly” books.

Pugh’s attorney, Steven D. Silverman, confirmed that the Office of the State Prosecutor is investigating the situation at the request of Gov. Larry Hogan. Spokeswomen for the U.S. Attorney’s Office and the Maryland Office of the Attorney General could not comment on the existence of any investigations from their offices Wednesday.

Matthew A. Esworthy, partner at Bowie Jenson LLC in Towson, said that investigations “have a tendency to explode” when enough people start paying attention and that he does not expect the Pugh situation to be resolved anytime soon.

“I think the State Prosecutor’s Office is going to take their time and do it right,” he said. “I don’t think anyone wants to falsely accuse the mayor of anything.”

Esworthy said that everyone is speculating right now but that, in the end, there may not be a finding of criminal conduct.

“The optics don’t look great. However, (Pugh) certainly could have done everything within the letter of the law,” he said. “It’s really too early to say that she’s done something wrong.”

Others agreed that, at a minimum, Pugh has an issue with “optics” as more becomes known about the Healthy Holly situation.

“It looks bad,” attorney Jeffrey E. Nusinov said of the controversy. “It’s what the public perceives as corruption in government.”

Warning that no one should jump to conclusions, Nusinov, of Nusinov Smith LLP in Baltimore, said while nothing illegal might have occurred, “mixing politics with business often leads people to think it wasn’t a legitimate contract or opportunity.”

Pugh accepted a total of $500,000 from the University of Maryland Medical System for her Healthy Holly books while she sat on the system’s board of directors. She stepped down from that position last month. In addition, it was reported on Monday that Kaiser Permanente had paid $114,000 for copies of the books during a period when the company was seeking a contract to provide health benefits to city employees.

Thiru Vignarajah, a former prosecutor who has been critical of the mayor’s failure to adequately explain her dealings with the entities buying her books, said that while there was the possibility for parallel investigations by multiple agencies, much information remained unknown.

“We’re in the third inning of a doubleheader,” Vignarajah said. “There’s an investigation that has just started. The mayor enjoys a presumption of innocence. … We shouldn’t get ahead of ourselves in terms of rushing to judgment.”

Vignarajah, a partner at DLA Piper in Baltimore, called for Pugh’s resignation and said the situation was distracting officials from the work they should be doing.

“Because the mayor has been unable to answer these serious questions to the public, she’s not in a position to discharge her duties as mayor,” Vignarajah said. “For the sake of the city, she should resign because her attention is divided between her private legal troubles and her public responsibilities.”

The scrutiny of Pugh brings comparisons to the investigation into former Mayor Sheila Dixon, who resigned in 2010 as part of a plea deal stemming from a corruption investigation. Pugh defeated Dixon in the Democratic mayoral primary more than two years ago.

But Nusinov, who was part of Dixon’s defense team, said he does not see Pugh’s situation as a repeat of Dixon’s.

“Based on what I’ve been reading, the magnitude and benefit to the mayor places it in a much different level,” he said.

Esworthy said that from what is currently known about Pugh’s situation, it differs from Dixon’s, which involved embezzlement stemming from her use of gift cards meant for underprivileged children.

“The tendrils of this are going to reach far and wide,” Esworthy said. “This certainly seems to be more serious than the Sheila Dixon criminal case.”

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