Searches by FBI, IRS add to Baltimore mayor’s mounting woes

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)

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 self-published children’s books to disguise kickbacks.

The multiple early-morning 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 her City Hall suite. Agents also scoured her two Baltimore homes, the home of an aide and a nonprofit organization she once led.

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.

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 out of sight Thursday, continuing her nearly month-long silence. Her main spokesman, James Bentley, said he hadn’t spoken with her and doesn’t even know where she is. But Silverman, her lawyer, told reporters he met with her Thursday afternoon to discuss “options” after the court-authorized searches by federal agents. He asserted that a way forward “will be up to her,” but did not offer more specifics.

Silverman also said Pugh is “physically still ill” from a bout of pneumonia and “emotionally extremely distraught” following the searches by FBI and IRS agents.

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

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.”

But 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.

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.

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