Prosecutors seek 57-month sentence for former mayor Pugh

Former Baltimore Mayor Catherine Pugh, left, leaves U.S. District Court in Baltimore with her attorney Steven Silverman on Thursday, Nov. 21, 2019. An 11-count federal indictment accused Pugh of arranging fraudulent sales of her “Healthy Holly” books to schools, libraries and a medical system to enrich herself, promote her political career and fund her run for mayor. (AP Photo/Steve Ruark)

Federal prosecutors are seeking a 57-month prison sentence for former Baltimore Mayor Catherine E. Pugh, who pleaded guilty to conspiracy and tax evasion charges in November.

Pugh is set to be sentenced by U.S. District Judge Deborah K. Chasanow on Feb. 27.

Pugh was indicted on Nov. 14, 2019, on 11 counts for a years-long scheme to enrich herself and fund her political campaigns by selling her “Healthy Holly” children’s books to organizations that did business with the state and Baltimore. She entered her guilty plea to conspiracy to commit wire fraud, conspiracy to defraud the United States and two counts of tax evasion on Nov. 21.

In a sentencing memorandum filed with the court Thursday, prosecutors argued that Pugh’s actions were “not rash behavior” but rather “a recurring pattern of well-executed steps that built on each other, becoming more audacious and complex leading up to the mayoral election.”

Pugh’s attorneys filed letters of support and other documents under seal Thursday. Attorney Steven D. Silverman said Thursday afternoon that the defense team “strongly disagrees with the government’s sentencing recommendation.”

“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 court,” Silverman said via email.

Pugh began selling her “Healthy Holly” books in 2010 and formed Healthy Holly LLC in 2011, when she was a state senator. Former aide Gary Brown Jr. helped her sell the books and organizations including the University of Maryland Medical System and Associated Black Charities were solicited to purchase copies to donate to Baltimore schools.

The books were never distributed to children but instead were moved around the city and resold by Pugh and Brown to other organizations, according to the statement of facts read at Pugh’s plea hearing. UMMS in subsequent years purchased more books, all of which were similarly stored and double-sold or never even printed.

Most of the purchasers “candidly admitted that agreeing to buy books from a politician like Pugh in an arms-length transaction (was) a good business decision” because of her influence and role in awarding contracts or supplying votes, according to the government.

Prosecutors also accuse Pugh of taking extensive steps to cover up her crimes, including paying for Brown’s attorneys when he was charged with election law violations by the Office of the State Prosecutor, making false statements to the press and making false statements on her state financial disclosure forms.

Pugh also allegedly attempted to prevent federal agents from seizing her personal cell phone last year, at first only turning over a city-issued phone during a search and then saying she had given her personal phone to her sister, according to the memorandum — which added that Pugh’s phone began vibrating in her bed when an agent called her number.

‘Remarkable’ scheme

Prosecutors called Pugh’s fraud scheme “remarkable in both its scope and duration” and allege Pugh’s business degrees and career in politics served her as she carried it out.

Pugh knew the importance of avoiding conflicts of interest, according to the memorandum, but regularly pitched her book to representatives of businesses and organizations that did business with the city.

Though there is no evidence Pugh extorted or solicited bribes from any of the organizations that purchased the book, her decision to approach companies that worked with the city “suggests that Pugh leveraged the power of her elected office to corruptly solicit money from (entities) that might be beholden to her,” prosecutors claim.

A “small side business” eventually became a source for illegal funds, according to the memorandum, and “Healthy Holly” book sales track with the electoral cycles when Pugh was on the ballot.

In 2016, Pugh approached J.P. Grant, of Grant Capital Management Inc. in Columbia, to say she needed additional campaign funds, according to the memorandum. Grant, who had already contributed the maximum $6,000 to Pugh’s campaign, wrote her a check for $20,000 from his wife’s account in the name of a consignment shop Pugh co-owned.

Pugh approached Grant again for financial assistance and described her book business and Grant agreed to purchase $50,000 in books with knowledge that the money would be used for her campaign, according to the memorandum. After winning the primary election, Pugh asked Grant for more funds to buy a larger house and he wrote a check to Healthy Holly for $100,000.

“In sum, Pugh was determined to do whatever was necessary to gain an unfair advantage over her mayoral rivals, including using a federal wire fraud scheme to facilitate repeated violations of state election laws,” the government alleges.

Pugh hid the income generated by the book sales from the IRS for years and took “egregious” steps to conceal the earnings, according to the memorandum.

Pugh “had countless opportunities for self-reflection, occasions when she could have checked her moral and ethical compass and chosen to change course,” according to the government, which added that she “chose to double down on a path of rampant criminal deception to fulfill her ambitions.”

The case is USA v. Catherine Elizabeth Pugh, 1:19-cr-0541.