U.S. Attorney’s Office hid – for nearly two years – its deal to water down Pugh’s sentence
Found guilty of a “shameless” scheme to enrich herself, Pugh was to repay nearly $700,000 and give up the house she bought with Healthy Holly money. Spoiler: That’s not how it went down. BREW EXCLUSIVE.
Above: As part of a deal quietly reached with federal prosecutors, Catherine Pugh’s house in Ashburton, where she has returned to live, was never sold. (Fern Shen)
Federal prosecutors talked tough at Catherine Pugh’s sentencing hearing in 2020, making the case for why the disgraced ex-mayor deserved stiff punishment.
Pugh “slowly and secretly, over the course of many years, conspired. . . to use the stature of her public persona for her own personal gain,” they said.
The amount of money, they pointed out, was huge – more than $700,000 gained through fraudulent means.
And the scheme itself – hawking cheaply produced “Healthy Holly” children’s books to nonprofits and businessmen dependent on Pugh’s actions as a state legislator and then as Baltimore’s mayor – was “shameless” and “sophisticated.”
They described how Pugh double sold the books, keeping the advance payments, charging for books that for the most part were never distributed, as promised, to poor Black children, then hiding the fraud with doctored invoices and a fake consulting contract.
“It’s like something right out of a mobster movie,” Assistant U.S. Attorney Martin J. Clarke told Judge Deborah K. Chasanow. “There was a bag man, Mr. Gary Brown. His job was to go around town and collect the cash she would call into the bank.”
Yet another purpose of the ill-gotten gains was to help Pugh buy – and substantially renovate – a three-story house she coveted in Ashburton.
After Pugh publicly acknowledged the facts above and pleaded guilty to wire fraud and tax evasion, the sentence that Chasanow imposed in February 2020 seemed tough:
Three years in prison, three years of probation and foreiture of $669,688, including the forfeiture of her house along with $17,800 in her campaign account.
So how is it that after serving 18 months in an Alabama prison, Pugh is now living in the Ashburton house she acquired through her corrupt scheme?
Not only living there, but owning a property that Chasanow had ordered forfeited and sold by the federal government as partial restitution for her illegal acts?
A Secret Deal
Freed from the custody of the federal prison system last month, Pugh is being welcomed back to Baltimore society as a public servant who has paid her dues.
But court records show that the dues she paid are significantly less than the public was led to believe.
The seemingly tough sentence was subsequently weakened thanks to a settlement agreement – inked outside of public view – by prosecutors and Andrew C. White, one of Pugh’s attorneys at Silverman Thompson.
The deal by U.S. Attorney Robert K. Hur and Assistant U.S. Attorney Tamera L. Fine on June 23, 2020 – made four months after the house forfeiture was ordered by Chasanow – was so attractive that Pugh agreed to its terms two days after it was offered.
In lieu of confiscating her house, “this Office agrees that it shall accept payment by the Defendant in the amount of $125,000 in United States currency” and “shall not seek to seize, market and sell the Subject Real Property.”
Pugh had to come up with $100,000 within 60 days and pay the remaining $25,000 at some future unspecified date.
She was also ordered to pay restitution to two of her victims – the University of Maryland Medical System (UMMS) and the Maryland Automobile Insurance Fund. The government would place a lien on the property for the $25,000 owed.
Pugh signed the agreement the day before she reported to the all-women’s prison in Aliceville, Ala.
Three weeks later, on July 14, 2020, the U.S. Attorney’s Office received a $100,000 payment from Pugh.
The court record does not disclose how she secured that money so quickly.
But one clue comes from the fact that Pugh had recently sold the modest house on Dennlyn Road, which she had lived in as a city councilwoman, state delegate and senator, for $75,000.
She also saw a $35,000 line of credit extended by The Harbor Bank of Maryland. Pugh’s original line of credit with Harbor Bank had largely been paid off with illicit Healthy Holly cash, according to the government’s Stipulation of Facts.
Long Delayed Disclosure
Despite Pugh’s conviction being the biggest political corruption scandal in Baltimore since the Sheila Dixon case in 2010, the altered terms of her sentence were never reported in the press.
That’s because it was never disclosed by the U.S. Attorney’s Office, which routinely sends out scores of press releases on criminal prosecutions and settlements.
The revised Pugh settlement was not placed on the court docket until January 27, 2022 – 19 months after it was executed.
Just days before, Pugh had been released from the Alabama prison into a residential program in Howard County after having served half of her 36-month sentence.
Queried this week about the settlement agreement, a spokeswoman for the U.S. Attorney said the office would not comment beyond what is disclosed in the court record.
The amended 2020 settlement, which allowed Pugh to keep her trophy house, was not placed on the court docket until January 2022.
On February 22 of this year, Judge Chasanow signed a Final Order of Forfeiture, which officially left the house in Pugh’s hands as she was about to be released from federal confinement.
The Bureau of Prisons confirmed to The Brew that Pugh was released on April 1, or 9-1/2 months ahead of the January 13, 2023 release date originally listed in the Bureau of Prisons’ inmate locator website.
Under the terms of her sentence, Pugh’s restitution was set at $412,348, for which the government asked for immediate payment.
After Pugh’s lead attorney told Chasanow “there’s nothing” in the former mayior’s bank account, the judge set a presumptive payment of $100 a month.
“We don’t know yet what she’ll be earning” after release from prison, Chasanow pointed out.
At a rate of $100 a month, it would take the now-72-year-old Pugh 333 years to complete the $400,000 she owes to UMMS.
According to publicly disclosed data, it will take Pugh 333 years to complete her restitution payments to UMMS.
Asked if the restitution plan has since been revised, the U.S. Attorney’s Office and the U.S. District Court declined to comment.
Nor would they say how much Pugh has paid in restitution (a payment schedule can be set up in prison).
“All publicly available information concerning restitution in this case is available on the court’s docket,” David Ciambruschini, chief deputy clerk of the court, told The Brew yesterday.
House Fit for Entertaining
In the “Stipulation of Facts” that Pugh signed as part of her guilty plea, prosecutors laid out the circumstances of her purchase of the Ellamont Road house.
For many years, she had lived at a modest house on Dennlyn Road. But shortly before she was elected mayor in 2016, she told J.P. Grant, whose Grant Capital Management held many city contracts (here and here), that “she wanted to buy a larger house so she could entertain people when she became mayor.”
Pugh had a specific house in mind and “suggested that Grant write a check to Healthy Holly.”
Grant did so, writing a check for $100,000, made payable to Healthy Holly, the LLC she used to accept payments, with the notation “book donation” on the check’s memo line.
Grant signed the check with the understanding that “Pugh would use the money to produce and distribute Healthy Holly books, with the balance of the money going toward the purchase of a new house,” prosecutors said.
But Pugh “never used any of those funds to print or deliver Healthy Holly books.”
Grant was not charged when Pugh was indicted in November 2019, and his admitted violations of state campaign finance laws have not resulted in any actions by Maryland State Prosecutor Charlton T. “Chuck” Howard III.
Renovated from Roof to Basement
Pugh bought the house for $117,000 in cash and proceeded to renovate the property from roof to basement during her first year in office.
According to building permit records, workers installed 15 new plumbing fixtures, a 80,000 BTU furnace, a two-ton AC unit, a new 200-amp electrical panel and 25 new circuits.
The house was further updated with a new roof, new basement windows, 15 changed-out interior doors, plus built-in closets and new sheetrock throughout.
A politically connected contractor, Commercial Construction, did much of the work at a steep discount, sources told The Brew at the time.
What’s more, a moving company linked to both Pugh and former Comptroller Joan M. Pratt (who co-owned with Pugh a consignment shop, 2 Chic Boutique) moved in Pugh’s belongings.
It was at this property where federal agents, armed with a warrant, descended on April 25, 2019, seizing boxes of books as the news media watched.
It’s where they found Mayor Pugh’s personal Samsung phone, that she falsely claimed was in Philadelphia, that helped them piece together the phone calls, false invoices, bank transactions and other evidence that documented her Healthy Holly scheme.
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