BALTIMORE, MD —The former mayor of Baltimore has been indicted on federal charges linked to a line of children’s books she sold, officials said Wednesday morning. The charges include fraud, tax evasion and related offenses.
Catherine Elizabeth Pugh, 69, of Baltimore is to appear Thursday in U.S. District Court in Baltimore for arraignment on charges of conspiracy to commit wire fraud, seven counts of wire fraud, conspiracy to defraud the United States and two counts of tax evasion, the U.S. Attorney for the District of Maryland reported. The charges stem from allegations of impropriety related to her company, Healthy Holly LLC, which she formed in January 2011 to publish and sell children’s books she wrote.
The 11-count indictment says that Pugh did not have a personal bank account and used her business bank accounts for both personal and professional use. It alleges she and a legislative aide used her Healthy Holly children’s books to “unlawfully enrich themselves, promote Pugh’s political career and fund her electoral campaign for mayor.”
Two former Baltimore City employees have pleaded guilty to related charges in the case.
Pugh was elected in 2016. She resigned May 2.
“Our elected officials must place the interests of the citizens above their own,” U.S. Attorney Robert K. Hur said in a statement. “Corrupt public employees rip off the taxpayers and undermine everyone’s faith in government. The U.S. Attorney’s Office and our law enforcement partners will zealously pursue those who abuse the taxpayers’ trust and bring them to justice.”
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Pugh served for nearly a decade as a member of the Maryland Senate. Her career in politics also included time on the Baltimore City Council and in the Maryland House of Delegates. She ran unsuccessfully for mayor of Baltimore in 2011, the indictment said.
According to the indictment, Pugh and her aide — Gary Brown Jr., who has pleaded guilty already to federal charges of conspiracy to commit wire fraud, tax evasion and filing a false tax return — were “double selling the books” while she was a state senator.
The indictment says Pugh sold 20,000 copies of her first book to Baltimore City Public Schools for $100,000, but once it decided not to use it in its curriculum, she ordered Brown to remove thousands of copies from a warehouse used by the school system in October 2011, so they could use them as giveaways at political fundraisers and arranged to sell them to a nonprofit health care insurer based in the Baltimore-Washington area.
In 2016, the indictment says she concealed how much money she was making from the book sales, claiming her taxable income was $31,020 and the tax due was $4,168 when her taxable income was $322,365, with an income tax due of approximately $102,444. According to the indictment, she concealed and under-reported her income in 2015 and 2016.
“Catherine Pugh betrayed the public’s trust,” Special Agent in Charge Jennifer Boone of the FBI’s Baltimore Division said in a statement. “The FBI will continue to diligently work to detect fraud and corruption and hold those who violate this trust accountable. The people of Maryland expect elected officials to make decisions based on the public’s best interests, not to abuse their office for personal gain. “
Pugh is expected to surrender to federal marshals before the hearing.
Catherine Pugh Indictment
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