By Baltimore Watchdog Staff
Former Baltimore Mayor Catherine Pugh was indicted by a federal grand jury on the federal 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. Justice Department announced Wednesday.
The indictment was returned on Nov. 14 and was unsealed today. Pugh is scheduled for an initial appearance and arraignment in U.S. District Court in Baltimore before U.S. District Judge Deborah K. Chasanow at 1 p.m. today, federal authorities said.
The Justice Department said Pugh is expected to self-surrender to the U.S. Marshals prior to the hearing.
In addition, authorities said two of Pugh’s associates, Baltimore City employees Gary Brown, Jr., 38, of Baltimore, and Roslyn Wedington, 50, of Rosedale, Maryland, pleaded guilty to related charges on Nov. 13.
Brown pleaded guilty to conspiracy to commit wire fraud, to two counts of conspiracy to defraud the United States, and to filing a false tax return, federal officials said. They said Wedington pleaded guilty to conspiracy to defraud the United States and to five counts of filing a false tax return.
The indictment and guilty pleas were announced by U.S. Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Jennifer C. Boone of the FBI’s Baltimore field office; and Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service – Criminal Investigation division.
“Our elected officials must place the interests of the citizens above their own,” Hur said. “Corrupt public employees rip off the taxpayers and undermine everyone’s faith in government.”
Boone said said that “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.”
Jackson said Pugh betrayed the public’s trust when, as the indictment says, she and Brown defrauded purchasers of the mayor’s Healthy Holly books to enrich themselves and promote Pugh’s political career.
“The indictment alleges that Catherine Pugh betrayed the public’s trust,” Jackson said in a statement. “Public officials should be a role model for the citizens they serve – adhering to the highest of standards.”
As stated in the indictment, between June 2011 and August 2017, four Healthy Holly books were published, with each book listing “Catherine Pugh” as author.
Most of the books were marketed and sold directly to non-profit organizations and foundations, many of whom did business or attempted to do business with the Maryland and Baltimore City governments, the indictment says.
According to federal authorities, the conspirators employed several methods to defraud, including not delivering books after accepting payments for them; accepting payments for books to be delivered to a third party on behalf of a purchaser, then converting some or all of the purchased books to their own use without the purchaser’s or third party’s knowledge; and by double-selling books without either purchaser’s knowledge or consent.
These activities occurred between November 2011 until March 2019, the indictment states.
Pugh allegedly stored quantities of fraudulently obtained Healthy Holly books at various locations, including her residence in Baltimore, her state legislative offices, her mayoral office, and a public storage locker used by Pugh’s mayoral campaign.
The indictment alleges that Pugh used the proceeds of the sale of fraudulently obtained Healthy Holly books for her own purposes, including: to fund straw donations to Pugh’s mayoral election campaign; and to fund the purchase and renovation to a house in Baltimore.
In addition, the indictment alleges that Pugh issued Healthy Holly checks payable to Brown, for the purpose of funding straw donations to the Committee to Elect Catherine Pugh.
Brown cashed the checks and used the untraceable cash to fund money orders, debit cards, and personal checks in the names of straw donors totaling approximately $35,800, federal authorities said. The straw donations purchased with the cash were allegedly then deposited into the bank account of the Committee to Elect Catherine Pugh, the indictment said.
The indictment alleges that Pugh wrote additional Healthy Holly checks to Brown totaling $26,300, which he cashed and gave the cash to Pugh. On Jan. 11, 2017, Brown was charged with, and ultimately convicted of, violating Maryland’s election laws for funneling $18,000 of the straw donations to Pugh’s campaign, authorities said.
In addition, the indictment alleges that Pugh conspired to evade taxes on the income received from the sales of Healthy Holly books. To accomplish this, authorities said, Pugh concealed from the IRS the fact that she created false business expenses to offset the income she received from the sale of books.
Federal officials also allege that Pugh filed false income tax returns for 2016 and 2015, in which she under reported her income.
Pugh served in the Maryland State Senate from 2007 to 2016. She ran unsuccessfully for mayor in 2011 but was elected to the city’s highest office in 2015. She served from Dec. 6 of that year until she resigned in May after revelations about her Healthy Holly book scandal came to light.