Baltimore mayor resigns amid kickback scandal – State’s accountant: Book-selling arrangements ‘brazen, cartoonish corruption’

In this June 8, 2018 file photo, Baltimore Mayor Catherine Pugh addresses a gathering during the annual meeting of the U.S. Conference of Mayors in Boston. Baltimore's mayor resigned under pressure Thursday. May 2, 2019 amid a flurry of investigations into whether she arranged bulk sales of her self-published children's books to disguise hundreds of thousands of dollars in kickbacks.(AP Photo/Charles Krupa, File)

By DAVID McFADDEN, Associated Press  BALTIMORE (AP) 05/02 — Baltimore’s mayor resigned under pressure Thursday amid a flurry of investigations into whether she arranged bulk sales of her self-published children’s books to disguise hundreds of thousands of dollars in kickbacks.

Mayor Catherine Pugh’s resignation came exactly a week after her City Hall offices, homes and multiple other locations were raided by FBI and IRS agents. She is the second mayor in less than a decade to step down because of scandal . She came to office contrasting her clean image with her main opponent, ex-mayor Sheila Dixon, who was forced to depart office in 2010 as part of a plea deal for misappropriating about $500 in gift cards meant for needy families.

Federal Bureau of Investigation and Internal Revenue Service agents enter City Hall in Baltimore, MD., on Thursday, April 25, 2019. FBI, IRS launched raids connected to Baltimore Mayor Catherine Pugh amid widening probes to determine whether she used sales of her children’s books to disguise government kickbacks. (Ian Duncan/The Baltimore Sun via AP)

 

“I am sorry for the harm that I have caused to the image of the city of Baltimore and the credibility of the office of the mayor,” Pugh said in a written statement read by her lawyer, Steven Silverman.

A federal grand jury has been empaneled and state and local inquiries are also underway into the roughly $800,000 Pugh made over the years in exchange for her “Healthy Holly” paperbacks about health and nutrition. She hasn’t been charged with any crime.

Since the book scandal erupted in late March, Pugh’s fractured administration has lurched from one crisis to another and various aides have been fired or left City Hall.

Her resignation provides a measure of resolution after weeks of uncertainty and mounting pressure for her to step down. Maryland’s Republican governor and numerous Democrats had pressed for her resignation, saying she was no longer fit to lead Baltimore.

“This was the right decision, as it was clear the mayor could no longer lead effectively,” Gov. Larry Hogan said in a statement Thursday afternoon. “Baltimore City can now begin to move forward.”

Now that Pugh has resigned, acting Mayor Bernard “Jack” Young automatically becomes the permanent mayor and will not need to be sworn in. Young, a Democrat and longtime City Council member, is currently in Detroit for a conference about economic development and will return to Baltimore over the weekend.

In a statement, Young thanked the thousands of city employees who came to work each day under uncertain circumstances for weeks.

“Although I understand that this ordeal has caused real pain for many Baltimoreans, I promise that we will emerge from it more committed than ever to building a stronger Baltimore,” he said.

Young declined to comment further when approached by Associated Press reporters at the Detroit conference.

Citing deteriorating health following a bout of pneumonia, Pugh took a paid leave on April 1 and hasn’t been seen in public since. The 69-year-old abruptly retreated to her home the same day that Hogan asked the state prosecutor to investigate public corruption accusations against her.

Baltimore police officer stand outside the house of Baltimore Mayor Catherine Pugh in Baltimore, MD., Thursday, April 25, 2019. Agents with the FBI and IRS are gathering evidence inside the two homes of Pugh and also in City Hall. (AP Photo/Jose Luis Magana)

 

In recent days, Silverman had repeatedly gone in and out of Pugh’s city home to discuss “options” with her while also asserting that she was so fragile physically and mentally that she was unable to make “major decisions.” Last week, Silverman had told reporters that she might be “lucid” enough to make a decision this week.

At issue for multiple investigators are questionable financial arrangements she negotiated over years selling her hard-to-find “Healthy Holly” books. The books were meant to be provided to schools and day care centers, but it’s unclear where tens of thousands of copies ended up.

Hogan has called the accusations against Pugh “deeply disturbing,” and the state’s accountant described the book-selling arrangements as “brazen, cartoonish corruption.” The City Council called for Pugh’s immediate resignation, as did numerous state lawmakers and an influential business group, among others.

The scandal erupted when it came to light that the University of Maryland Medical System, one of the state’s largest private employers, paid Pugh $500,000 for 100,000 copies of her children’s books. There was no contract behind the deal and the hospital network described some of the purchases as “grants” in federal filings.

Before she became mayor, Pugh once sat on a state Senate committee that funded the major health network. She started serving on the system’s board in 2001. Pugh was not the only one who benefited: Roughly one-third of the system’s board members received compensation through the medical system’s arrangements with their businesses. As she became the public face of the scandal, however, she stepped down from the board and returned her most recent $100,000 payment.

In a Tuesday, April 2, 2019 file photo, acting Baltimore Mayor Jack Young talks to reporters after meeting with state senators who represent Baltimore in Annapolis, M.D. Baltimore’s mayor resigned under pressure Thursday, May 2, 2019 amid a flurry of investigations into whether she arranged bulk sales of her self-published children’s books to disguise hundreds of thousands of dollars in kickbacks. Now that Pugh has resigned, acting Mayor Bernard “Jack” Young automatically becomes the permanent mayor and will not need to be sworn in. (AP Photo/Brian Witte, File)

 

Pressure on Pugh to resign ratcheted up dramatically after Kaiser Permanente disclosed that it paid her limited liability company about $114,000 between 2015 and 2018 for roughly 20,000 copies of her illustrated books. Pugh became Baltimore’s mayor in 2016. The next year, Baltimore’s spending board, which is controlled by the mayor, awarded a $48 million contract to the Kaiser Foundation Health Plan of the Mid-Atlantic States Inc. When asked who Kaiser bought the books from, company spokesman Scott Lusk said: “We purchased the books from Healthy Holly, LLC.” That is Pugh’s company.

Others then came forward, including Maryland financier J.P. Grant. He acknowledged writing a roughly $100,000 check to buy Pugh’s “Health Holly” books but insisted he expected nothing in return.

At a rambling news conference days before retreating from public view, Pugh described her book deal worth $500,000 with the university-based health care system as a “regrettable mistake.” She has not publicly addressed the other lucrative arrangements that have come to light.

___

Associated Press writer Corey Williams and photographer Carlos Osorio contributed to this story from Detroit.

https://www.apnews.com/b12452170b99485fac258adac6dd95c0

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Posted in: Bribery, FBI, Illegal Activities, IRS, Official Corruption

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