FBI, IRS agents search Baltimore mayor’s homes and City Hall offices – Mayor sold $800,000 of her own books in questionable transactions

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.When Bernard “Jack” Young automatically became Baltimore’s acting mayor on April 1, he emphasized that he’d act only as a “placeholder” for the embattled elected mayor. But it’s been more than three weeks since Mayor Catherine Pugh slipped out of sight on an indefinite leave of absence, and it appears Young is settling in for a lengthy stint as Baltimore’s No. 1 official. (AP Photo/Charles Krupa, File)

By DAVID McFADDEN,  Associated Press  BALTIMORE (AP) 04/25 — Federal agents raided the homes and City Hall offices of Baltimore’s embattled mayor on Thursday amid dramatically widening investigations to determine whether she used bulk sales of her obscure self-published children’s books to disguise kickbacks.

The multiple searches pushed the latest political scandal for Maryland’s largest city to a crescendo after weeks of uncertainty and mounting pressure for Baltimore Mayor Catherine Pugh to step down. The politically isolated first-term mayor, who has long been an avid runner, slipped out of sight April 1, citing deteriorating health, just as the governor called on the state prosecutor to investigate allegations of “self-dealing” by the embattled Democrat.

Gov. Larry Hogan joined calls for her immediate resignation after news broke of the Thursday morning raids, as agents with the FBI and the IRS criminal division carried boxes of evidence out of City Hall. Agents also scoured her two Baltimore homes, the home of an aide and a nonprofit organization she once led.

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)

 

The mayor’s attorney, Steve Silverman, said federal agents came to his city law firm Thursday morning to serve a subpoena for her original financial records. They were directed to a sequestered area where Pugh’s documents were kept, he said, and they did not seek any attorney-client privileged communications.

And University of Maryland Medical System spokesman Michael Schwartzberg disclosed that the medical system received a grand jury witness subpoena seeking documents and information related to Pugh.

In recent weeks, Pugh’s fractured administration has staggered from one crisis to another. Yet days before announcing her departure on an indefinite leave of absence she held a hastily organized press conference where she called her no-contract book deals a well-intentioned but “regrettable mistake.”

Others have been less charitable about the murky arrangements that earned $800,000 for her “Healthy Holly” limited liability company. Maryland’s chief accountant called Pugh’s “self-dealing” book deals “brazen, cartoonish corruption.”

For years, Pugh, 69, had somehow negotiated lucrative deals to sell her “Healthy Holly” books to customers. She sold $500,000 worth of the illustrated paperbacks to the University of Maryland Medical System, on whose board she sat for nearly 20 years. She also made $300,000 in bulk sales to other customers including two major health carriers that did business with the city.

Baltimore police officers 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)

The revelation of a major federal investigation comes amid a criminal investigation by the state prosecutor’s office, which probes public corruption in Maryland. Other probes include a review by the city ethics board and the Maryland Insurance Administration.

“Mayor Pugh has lost the public trust. She is clearly not fit to lead,” Hogan declared in a statement Thursday. “For the good of the city, Mayor Pugh must resign.”

Pugh remained silent Thursday. Her main spokesman, James Bentley, said he hadn’t spoken with her and doesn’t even know where she is. Silverman, her lawyer, says his firm “will continue to vigorously defend the mayor, who is entitled the presumption of innocence.”

Political analysts say Pugh’s biggest bargaining chip is her refusal to resign from the mayor’s office.

But City Council member Brandon Scott said an exhausted Baltimore has had enough. He reiterated the council’s unanimous demand for her resignation, calling the spectacle of the Thursday raids “an embarrassment to the city.”

Only a conviction can trigger a mayor’s removal from office, according to the city solicitor. Baltimore’s mayor-friendly City Charter currently provides no options for ousting its executive.

On Thursday, City Solicitor Andre Davis said he’s received documentation showing all of the items seized by FBI and IRS agents at City Hall but he’s made the determination not to release details publicly so as not to impede an ongoing investigation. He said the searches at City Hall were “limited to the mayor’s suite on the second floor.”

Six of Pugh’s staffers joined her on paid leave earlier this month; three of them were fired this week by the acting mayor.

Federal agents arrive at the Maryland Center for Adult Training in Baltimore. MD, Thursday, April 25, 2019. Agents with the FBI and IRS are gathering evidence inside the two homes of Baltimore Mayor Catherine Pugh and in City Hall, as well as the office of her lawyer and the home of a top aide. (Loyd Fox/Baltimore Sun via AP)

 

Pugh came to office in late 2016 after edging out ex-Mayor Sheila Dixon, who had spent much of her tenure fighting corruption charges before being forced to depart office in 2010 as part of a plea deal connected to the misappropriation of about $500 in gift cards meant for needy families.

She would certainly face a bruising 2020 Democratic primary if she were to return and run for reelection. Veteran City Council leader Bernard “Jack” Young, who is serving as acting mayor, said as she went on leave that he would merely be a placeholder. But this week, before the raids, he said “it could be devastating for her” if she tried to return.

https://www.apnews.com/95cebaa8c4ab4bc89aa9d7b01c6f6aed

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

Posted in: Bribery, FBI, Illegal Activities, Investigations, IRS, Misconduct/Abuse of Authority, Official Corruption

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