Scam linked to race in 2016
Prosecutors: Pugh pumped book profits into campaign fund
As federal prosecutors laid out what they described as a “shocking” corruption case against former Baltimore Mayor Catherine Pugh, they ticked off a list of victims.
Buyers who paid for her selfpublished children’s books that were never printed. Schoolchildren who never received copies. The federal government, which Pugh shorted of thousands of tax dollars.
But there was another, bigger victim in the background: The voters of Baltimore.
That’s because the “Healthy Holly scam,” as prosecutors called it, wasn’t just a yearslong self-enrichment scheme. It also was a way for Pugh to try to illegally influence an election and achieve her dream job as the 50th mayor of Baltimore, the U.S. attorney’s office said.
Pugh used the books as promotional materials during her 2016 mayoral run and the proceeds from their sale to pump illegal money into her campaign, prosecutors said. She was sentenced Thursday to three years in prison after pleading guilty to four felony counts of conspiracy and tax evasion.
In court, Assistant U.S. Attorney Martin Clarke said Pugh engaged in “election fraud” in a race she narrowly won against a crowded primary field. With her expenditures exceeding $2.5 million during the campaign, Pugh easily outspent most of her rivals — but
Pugh
did so, in part, by using illegal proceeds from “Healthy Holly” book sales, prosecutors say.
While prosecutors haven’t put a definitive total on how much “Healthy Holly” money they say Pugh used to benefit her campaign, they cite three key numbers: $400,000 from book sales to institutions with business before city or state government, including $170,000 from a large donor; and more than $62,000 handled by a close Pugh aide that resulted in thousands of dollars of illegal straw donations.
“The deposits of $400,000 from book sales leading up to the mayoral election gave Pugh a big financial advantage over other mayoral rivals,” said Clarke, the lead prosecutor on the case. Clarke said Pugh “deliberately and cunningly set out to deceive people” and to “rig an election to her advantage and cover it all up.”
Now, candidates who lost to Pugh in 2016 are looking back with the feeling that the voters were cheated.
Pugh won the all-important Democratic mayoral primary in April 2016 by just 2,400 votes — less than 2 percentage points — over her closest rival, former Mayor Sheila Dixon.
Pugh’s path to victory wasn’t always clear. Early in the hotly contested campaign, Dixon — herself trying to bounce back from a corruption scandal — was the front-runner. However, there were many anti-Dixon voters searching for the best candidate to beat Dixon.
Using money from “Healthy Holly” book sales, Pugh attempted to inflate her fundraising totals, prosecutors say, to appear stronger to donors, voters and power brokers. And while other campaigns had to pay for flyers and literature, Pugh had books on hand for giveaways to promote herself, prosecutors alleged.
Pugh’s fundraising strength helped build momentum for her campaign, said Hassan Giordano, a Dixon supporter who raised concerns in 2016 about other issues in the primary as part of the group Voters Organized for the Integrity of City Elections.
“It played the entire role from start to finish,” Giordano said of Pugh’s fundraising. “Catherine Pugh knew that. People ended up getting behind her who would have never been behind her. There is no guarantee Sheila Dixon would have won, but Catherine Pugh might not have been the Democratic nominee.”
Former City Councilman Carl Stokes, a 2016 mayoral candidate who slipped from third to fifth in the race when robust money and support rallied around Pugh, called prosecutors’ latest revelations “shocking and disheartening.”
“Hearing the election itself may have been influenced by illegal monies and activities really just hurts,” Stokes said. “It hurts the city. It hurts us all.”
Dixon, who is again seeking the city’s top job, called the latest revelations “unfortunate.”
“It’s discouraging because people look at that, and they feel their votes don’t count,” Dixon said. “At this point, we can’t go back. Hopefully, things are in place so this doesn’t happen in the future.”
Questions about Pugh’s election tactics began in the middle of the 2016 campaign, when she posted the strongest fundraising totals in the field, but $66,000 in checks to her campaign bounced. Several of Pugh’s rivals began ringing alarm bells.
“She has apparently received thousands of dollars from dummy corporations that don’t exist, from people who say they don’t have thousands of dollars to give,” candidate Elizabeth Embry, who finished third in the primary, said at the time.
Then, a political action committee supporting Pugh and attacking Dixon was fined $55,000 for violations of campaign finance laws.
During early voting in 2016, Pugh was accused of a “vote-buying” scheme in which her campaign promised payment and food to job recruits before busing them to the polls to vote.
When some recruits weren’t given Election Day jobs as promised, they damaged vehicles outside Pugh’s campaign headquarters.
“This is part of a pattern of questionable, and potentially illegal, campaign tactics, and the voters need to know the facts,” Embry warned at the time. “Our city has not forgotten that it was a courthouse on Calvert Street where Sheila Dixon’s administration ended, and we cannot afford to have another administration end in that same courthouse.”
Embry, who is a special assistant to Maryland Attorney General Brian Frosh, declined to comment for this article.
What’s more, state prosecutors fined a political slate funded by former Baltimore County Executive James T. Smith Jr. $3,000 for making an unlawful $100,000 loan to
Pugh in the final days of the 2016 primary campaign. After winning the election, Pugh hired Smith to a $175,000-a-year job at City Hall.
While questions swirled around Pugh’s campaign tactics years ago, federal investigators brought forth new allegations of political misconduct in recent months as they revealed their case against her.
Prosecutors have secured a guilty plea from one of her longtime aides, Gary Brown Jr., who confessed to a range of actions he and Pugh took to illegally profit from her book sales.
Prosecutors said Pugh and Brown conspired to inflate her campaign finance account through illegal means by using money from the book sales. The two believed that if voters learned Pugh put her own money into the campaign, “she would appear desperate,” so they made contributions in other people’s names, in violation of Maryland election law. In total, Brown and Pugh cashed out approximately $62,100 in Healthy Holly money during 2016, all of which went to straw campaign donors or Pugh, prosecutors say.
A straw donor is a person who illegally uses another person’s money to make a political contribution.
When state prosecutors convicted Brown of violating state election laws in 2017 by funneling cash to the campaign through his relatives — using the bank accounts of his mother, stepfather and brother — Pugh kept him in a job at City Hall, praising him as a “good employee.” Federal prosecutors now say that when Pugh answered questions from reporters at the time, she lied, claiming she didn’t know where the money Brown handled came from and hadn’t looked into it.
And federal prosecutors said the corruption went deeper. In particular, they focused on funds Pugh solicited from businessman J.P. Grant, who does frequent business with City Hall and holds a lucrative agreement with the city under which he is paid for providing ready cash for large municipal purchases.
“She solicited approximately $170,000 in campaign contributions directly from Grant and his company using Healthy Holly and [Pugh’s other side business] 2 Chic Boutique as cover,” prosecutors wrote in a memo before Pugh’s sentencing. “In total, believing campaign finance laws did not apply to her, she used the $231,200 in an attempt to influence the outcome of the mayoral election and buy a house suitable to that office, the majority of which were proceeds from the Healthy Holly scam.”
Only Pugh, Brown and Roslyn Wedington, director of a nonprofit Pugh championed, have been charged in the current case. Pugh has also been charged in state court with perjury over disclosure forms she filed while a state senator.
In federal court, Pugh, 69, tearfully apologized “to anyone I have offended or hurt through my actions.” She said she had “turned a blind eye” and “sanctioned things I should not have.”
Prosecutors say the harm she caused to the public’s faith in fair elections could be long lasting.
“Ms. Pugh had no qualms using any means necessary to win the mayoral election,” Clarke told the judge.
Clarke asked rhetorically whether Pugh’s cheating changed the outcome of the election. “I don’t think anybody knows the answer to that question,” he said.
Farajii Muhammad, a radio show host on WEAA-FM, said it’s a “valid” question whether Pugh would have become mayor without employing illegal tactics.
“I wonder, to be honest, about the legitimacy of her campaign,” Muhammad said. “At the end of the day, people just want to win. They want to win at the expense of truth. They want to win at the expense of integrity. They want to win at the expense of the democratic process.”