Former Baltimore Mayor Catherine Pugh pleaded guilty Thursday to fraud and tax-evasion conspiracies to illegally hide profits from sales of her children's books to enhance her political and personal fortunes.
Pugh's acknowledgement of guilt came during a court hearing in Baltimore, where the 69-year-old once led Maryland's largest city.
Her appearance came a day after the U.S. attorney's office for Maryland unsealed an 11-count indictment against Pugh after a three-year investigation into sales of the Healthy Holly book that began when she was a state senator representing Baltimore in Annapolis.
Pugh pleaded guilty to four of the 11 charges against her in an ongoing hearing.
Authorities in April searched Baltimore City Hall, Pugh's homes and a nonprofit tied to her, seeking financial documents and other information related to almost $800,000 she allegedly was paid for her self-published books.
After the searches, Pugh, a Democrat elected in 2016, took an indefinite leave as mayor and never returned to her job at City Hall. She resigned in May, with longtime City Council President Bernard "Jack" Young elevated to acting mayor.
Prosecutors accuse Pugh of running a sham business dating to 2011 that she used to sell her books in schemes that involved skimming part of customers' paid orders for her own promotions and also churning sales by reselling books that already had been purchased but not delivered or that were being held in storage.
Most of the books in Pugh's transactions were marketed and sold directly to nonprofit organizations and foundations, many of whom did business or tried to get business with the state and city of Baltimore, prosecutors allege.
Pugh used the sales proceeds, according to court papers, to fund her mayoral bid and to buy and renovate a house in Baltimore. She also is accused of evading taxes on the income generated by sales of her Healthy Holly series about a black girl, Holly, who follows a healthy lifestyle.
Among the books diverted and resold, prosecutors said, were thousands purchased and donated for use by Baltimore public students.
In all, court records show, Pugh took purchase orders for roughly 124,000 books but had printers produce only 63,210.
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 show in cases also unsealed Wednesday.
The Baltimore Sun first reported in March that Pugh received $500,000 from the University of Maryland Medical System for a total of 100,000 books starting in 2011, when she served on a state Senate committee that partially funded the private hospital network -- and on its board.
Starting in 2011, for instance, court files say Pugh began negotiating 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 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, court papers show.
During the year she was elected mayor, prosecutors also allege Pugh evaded taxes on her book sales and underreported her income, paying $4,168 in taxes, when prosecutors say she owed the government $102,444.
A Section on 11/22/2019
Print Headline: Ex-Baltimore mayor admits to fraud