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Pugh indictment renews focus on UMMS self-dealing scandal

Robert Chrencik, former president and CEO of the University of Maryland Medical System (The Daily Record / Bryan P. Sears)

Robert Chrencik, former president and CEO of the University of Maryland Medical System (The Daily Record / Bryan P. Sears)

This item is part of The Daily Record’s coverage of the Catherine Pugh "Healthy Holly" scandal.
Sentencing: Former Baltimore mayor Pugh sentenced to 3 years in prison | After sentencing, Pugh says she hopes to rebuild her life
Timeline: A timeline of the Catherine Pugh scandal
Earlier coverage: Pugh pleads guilty to conspiracy and tax evasion charges | In a hushed courtroom, a stoic Pugh admits to her crimes | Former Baltimore mayor Pugh indicted on 11 federal counts | Indictment renews focus on UMMS self-dealing scandal | Trail to Catherine Pugh started with obscure aide’s campaign finance violation | Read the indictment | Watch the U.S. Attorney's news conference | Ex-Pugh aide’s swearing-in for House delayed following indictment | Pugh aide found guilty of campaign finance violations

The federal indictment of former Baltimore Mayor Catherine Pugh leaves questions about where the University of Maryland Medical System, the primary buyer of her Healthy Holly children’s books, stands as it continues to deal with the fallout of a wide-ranging self-dealing scandal.

The indictment also details how other nonprofits in the city became involved in Pugh’s scheme to turn children’s books into campaign contributions.

While the indictment described how purchases of the books were made, U.S. Attorney Robert Hur declined to say at a press conference whether the books’ buyers were victims or conspirators.

He also said that prosecutors were continuing “to look at all the potential criminal charges that can be filed in this investigation.”

The Pugh scandal was the most visible portion of a wider controversy over business arrangements between the University of Maryland Medical System and members of its board.

Pugh, a longtime member of the board, had received $500,000 from the board since 2011 to pay for Healthy Holly books, though she later returned $100,000 for books never delivered.

Several members of the board had business with the system. A UMMS-commissioned review exonerated some board members while blaming former system head Robert A. Chrencik for a lot of the issues.

Chrencik has resigned as head of the system, and all board members with business dealings with the system have also resigned. Some only resigned after legislation passed this year required a complete board overhaul.

That legislation also required a legislative audit of the system. That audit was originally due out next month, but the report’s deadline has been extended to March 13 next year after Gregory A. Hook, the legislative auditor, wrote in a letter to Senate President Thomas V. Mike Miller, Jr., and House Speaker Adrienne Jones that UMMS had “delayed and hindered our work by repeatedly failing to make employees available and failing to provide requested information on a timely basis.”

The office has completed its field work despite delays in obtaining documentation and unanswered questions, Hook wrote.

Despite 600 days of work by 37 employees of the Office of Legislative Audits, Hook wrote that “a significant amount of work” remains to complete the audit. 

John Ashworth, the system’s interim president and CEO, said the system looks forward to the release of the report.

“The scope of the OLA audit was comprehensive and required the commitment of countless labor hours and the production of many thousands of documents on the part of UMMS,” he said in a statement. “OLA Auditors have been on site for 6 months and we have always endeavored to work collaboratively and transparently with them. We appreciate the agency’s commitment of time and resources and look forward to the issuance of their report.”

Mohan Suntha, who has been named as the system’s next president and CEO, will take over the top job Dec. 1. Del. Nicholaus R. Kipke, R-Anne Arundel and the House minority leader, said he hopes the new leadership will bring change to the system.

“The level of corruption that has been exposed at UMMS is striking, and I think it’s likely that there’s more that we don’t know about that I hope is exposed with the ongoing audit,” he said in a statement. “It’s great to see new leadership there, and I’m optimistic that going forward a brighter day is ahead for (UMMS).”

Pugh’s indictment describes some ways in which prosecutors allege she defrauded the medical system.

The books the system paid her to deliver to Baltimore City Public Schools were later recovered by Pugh and her associates from a school system warehouse and sold to other purchasers, the indictment said.

Pugh also delivered fewer books than promised. In 2012 the system paid $100,000 for the delivery of 20,000 books to the schools. But after receiving the check, Pugh delivered just 18,600 of the books to the schools, keeping 1,400 books for herself, the indictment said.

The same scheme played out in 2015, when 19,000 books of a 20,000 book order went to the schools with another 500 books delivered to Pugh, according to the indictment.

The indictment also said that the medical system had no knowledge that books delivered to the school system were never distributed to children and that the school system received fewer books than promised.

The medical system declined to comment on the indictment.

The indictment also listed other Maryland organizations prosecutors say were defrauded by Pugh: CareFirst BlueCross BlueShield, the Maryland Automobile Insurance Fund, Frederick Frank Trust and Kaiser Permanente.

Books delivered to CareFirst, MAIF and Kaiser were books originally sold to UMMS. Other books sold to Kaiser, MAIF and the Frederick Frank Trust were never delivered, the indictment alleges.

Daily Record government affairs reporter Bryan P. Sears contributed to this report.

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