BALTIMORE _ Former Baltimore Mayor Catherine Pugh pleaded guilty to conspiracy and tax evasion charges in federal court Thursday, publicly acknowledging wrongdoing related to her "Healthy Holly" book deals for the first time since The Baltimore Sun first began exposing them in March.
The plea came one day after federal prosecutors alleged in an 11-count indictment that Pugh's self-publishing enterprise amounted to little more than a criminal racket. It comes eight months after the Sun's revelations and subsequent raids on Pugh's homes and City Hall by FBI and IRS agents torpedoed her political career and forced her from office.
Her acceptance of guilt, though on a narrower set of charges than her indictment laid out, could likely land Pugh, 69, in prison. Her sentencing has been scheduled for Feb. 27.
Standing before U.S. District Judge Deborah K. Chasanow in the downtown federal courthouse, Pugh, a Democrat, spoke softly as she confirmed she understood the sweeping allegations against her, and the potential for her to spend years behind bars.
She surrendered her passport, under terms that would allow her to go free pending her sentencing.
She pleaded guilty to conspiracy to commit wire fraud, conspiracy to defraud the United States, and two counts of tax evasion. The counts entail much of the sweeping allegations against Pugh in the initial indictment _ that she knowingly sought to defraud purchasers of her books, reap the financial and political benefits, and pay little or no taxes on the windfall.
After prosecutors read a lengthy list of facts behind the first conspiracy charge Pugh was pleading guilty to, the judge asked her if she agreed they were all true.
After a pause, she said, "I do."
Did she agree she was guilty of the charge, the judge asked?
"Yes," Pugh said.
After Pugh's plea, Chasanow instructed Assistant U.S. Attorneys Martin Clarke and Leo Wise to read through the facts pertaining to those four counts, which Pugh would be stipulating as true under the terms of her plea agreement.
"Ms. Pugh, you need to listen carefully," Chasanow said.
The four counts to which Pugh pleaded guilty collectively carry a maximum sentence of decades in prison, though she could receive far less than the guidelines allow at sentencing.
Under the terms of the plea, Pugh did not acknowledge guilt in relation to seven individual counts of wire fraud.
As a condition of her supervised release pending sentencing, Chasanow said Pugh has agreed to pay what she owes the IRS for 2013 through 2017, and to complete a financial assessment outlining all assets of $1,000 or more, including any assets transferred to third parties since 2013. She also cannot travel abroad or be in contact with anyone named in the case.
In the indictment made public Wednesday, prosecutors had alleged that Pugh, while a Democratic state senator and then mayor, for years cajoled companies and nonprofits with business before the state and city to spend large sums of money on her books, sometimes without ever printing the promised copies or delivering them to the city kids she claimed would be the beneficiaries.
Pugh used the proceeds, prosecutors allege, to boost her career, buy a house and funnel straw donations to her mayoral campaign _ all while avoiding public disclosures of the payments required of her positions and disguising the funds to avoid paying taxes on them.
The deals included $500,000 for 100,000 books from the University of Maryland Medical System, where Pugh sat on the board of directors. After the Sun first began reporting on those deals in March, Pugh was dismissive of concerns, calling inquiries about the sales a "witch hunt." She also said she paid all required taxes on those sales, though prosecutors now say she did not.
Prosecutors alleged Pugh sold at least 125,000 copies of her books, but printed fewer than 65,000, and "intentionally double-sold" the copies she did have to multiple buyers without their consent.
Prosecutors had sought to seize $769,688 of her profits from the illegitimate book sales, as well as her current home in Ashburton, which they alleged she bought and renovated with fraudulently obtained funds.
Chasanow says the parties have not reached any agreement on what Pugh will have to forfeit, which may still be negotiated or litigated.
The full terms of Pugh's plea deal were not entirely known, though some legal experts said it could involve cooperation on her part with federal authorities in exchange for leniency.
David Jaros, a professor at the University of Baltimore School of Law, said that, "from a purely cold, strategic vantage point, the most logical reason to give up your rights to force the government to prove its case beyond a reasonable doubt is that you think there is some advantage to pleading now opposed to later, and in a case like this, the one thing a criminal defendant can bring to the table is information about other criminal activity."
But the guilty plea also could mean that Pugh "just wants to resolve the matter and move on with her life and face whatever consequences she's going to face," Jaros said.
"None of us are standing in Mayor Pugh's shoes and facing what she's facing," he said. "It is very hard to be confident that you can say what is going on in someone's mind who is facing these kinds of consequences."
City solicitor Andre Davis, who said he hasn't spoken to Pugh since she resigned, said Thursday "it's very, very sad day for her."
"It's an even sadder day for the city of Baltimore."
In addition to Pugh, federal prosecutors also have secured a guilty plea in the "Healthy Holly" case from one of her longtime aides, Gary Brown Jr., who confessed in a stipulation of facts to a range of actions that he and Pugh took to facilitate big personal and political profits from her book sales.
Prosecutors allege Pugh sold books to some of the largest organizations and most prominent business people in Baltimore, including the University of Maryland Medical System but also health provider Kaiser Permanente; insurer CareFirst BlueCross BlueShield; the nonprofit Associated Black Charities; and the Columbia businessman J.P. Grant, head of the financial company Grant Capital Management.
Prosecutors said they have been building their case against Pugh for years, almost entirely behind the scenes until the Sun's reporting began and the raids occurred in April.
Maryland U.S. Attorney Robert Hur said Wednesday that his office could not say more about the investigation beyond what was outlined in the indictment, but vowed a complete investigation. The matter was not closed, he said.
"The public should be confident that we are conducting a very, very thorough investigation," he said. "Rest assured, we are continuing to look at all the potential criminal charges that can be filed in this investigation."
