Inside The Case: How Federal Agents Built Their Investigation Into Catherine Pugh's 'Healthy Holly' Book Scandal

BALTIMORE (WJZ) -- Two years ago this month, Catherine Pugh resigned as mayor of Baltimore in disgrace. The once-powerful politician is now serving three years in an Alabama prison in one of the city's biggest public corruption scandals.

Now that all of the defendants in the scheme that lead to her downfall have been sentenced, representatives of the FBI and IRS can speak about the case.

WJZ Investigator Mike Hellgren sat down with them in an interview at the FBI's Baltimore Field Office in Woodlawn. They stressed many federal and state investigators worked together to uncover the corruption the former mayor was trying to hide from public view.

"These cases highlight the collaborative work that our agencies do together," said Special Agent Veronica Kyriakides with the Internal Revenue Service.

"[Pugh] was trying to cover her tracks as quickly as she could," FBI Special Agent Christine Parr said. "We collected a lot of information. We served more than 350 federal grand jury subpoenas. We did more than 80 interviews. We did, you know, more than 20 search warrants."

The investigations began just weeks after Pugh settled into the mayor's office. Investigators discovered her close aide Gary Brown, Jr. was disguising thousands of dollars in donations that helped Pugh win a tight mayoral primary.

But where was the money coming from? Some digging revealed an unlikely source: "Healthy Holly,'" Pugh's children's book series.

"It started just by looking at records, financial documents," Parr said. "...Not only was she defrauding from the books, but she was using that money she earned from the books to also get people to do straw donations through Gary Brown."

"It seemed like from the beginning, it was a scheme to make money and also to use it for her campaign."

Agent Parr brought some evidence to show WJZ at our interview. It included a few of the Healthy Holly books.

The thousands recovered are set to be destroyed.

She also showed us the onesies, bibs and jump rope that the mayor once said were part of an expanded Healthy Holly line of products.

They had not been publicly seen since Pugh's bizarre press conference in March of 2019 where she spoke in a whisper and showed off the items at city hall.

"We knew a lot at the time, but we didn't know about the baby clothing line," Parr said. "She made it seem like this was a big enterprise she had, but it wasn't. She didn't have these clothes ready to sell or anything like that."

"She knew exactly what happened, Parr said. "Her statements to the press that she didn't know where that money came from are absolutely false."

Pugh used her position on the board of the University of Maryland Medical System to get them to spend hundreds of thousands of dollars on her books, which cost little to produce. Many were supposed to be donated to city schools, which found them unusable.
"It had severe grammatical errors, where the school system had to then edit the copy," Parr said. "...So it wasn't as if she had this great book she wanted to get to kids because they need to be healthy. It was a way for her to make money, and a way for her to get her name out."

On top of it, Pugh was only delivering a fraction of the books—sometimes selling the same ones again to others who did business with the city and pocketing the cash and not reporting it on her taxes.
"I think we're hopeful," said IRS Special Agent Kyriakides when asked if they would recover all that was lost. "People want to know that elected officials will also be held accountable for their crimes."

Parr noted, "She was ordering books that wasn't printing and then she was double selling them. That's brazen."

Agent Parr helped carry out the then-unprecedented raid on City Hall during the probe. Other investigators carried out another raid that same day at Pugh's large new home in Ashburton, bought with Healthy Holly proceeds.

"Before we could get a chance to execute our warrants, she jumped on the phone and tried to order 40,000 more of the books," Parr said of the cover up.

"We don't want to ruin someone's reputation based on a maybe. We're very sure before we go into someone's house that we have a good case," Parr said

Parr said Pugh hid her cell phone from authorities who had a warrant for it.

"She did not cooperate. She gave her phone to her sister. So one of the agents called her personal phone and it was ringing, vibrating in her bed, hidden under her covers," Parr recalled. "But we were very professional. We brought a nurse with us. She was 69 years old. So our nurse held her hand while we searched her house until her attorneys got there."

The reality was sinking in for the embattled mayor.

"I think she was shaken and she started to feel the impact of the seriousness of what she had done," said Parr.

It was difficult to track down all of the Healthy Holly books.

"Some of them were in a storage unit at the Baltimore City Public Schools. Some of them were in Catherine Pugh's home. Some of them were at City Hall. Some of them were at a storage unit belonging to a friend of hers," the special agent said. "She didn't just store them. She use them as campaign pamphlets, campaign giveaways. So there's no way to track all of them down."

As for Pugh, in public remarks after her federal sentencing last year, she claimed she learned her lesson.

"None of this was intentional," Pugh told reporters.

"I think the first thing I should do is apologize to the citizens of Baltimore, who put their faith and trust in me as their mayor," she said.

Earlier this year, Pugh begged then-President Trump for clemency to get her out of prison. He never granted her request.

"What message do you hope this case sends to the public?" Hellgren asked Parr. "We want public officials to follow the rules. We want them not to use their office for personal gain. That's really what it comes down to," Parr said.

"It's a shame that public officials abuse their position of trust. And it seems to have been a past issue with Baltimore. This case brings it up again. Hopefully, the voters can find people they trust to lead this community in the right direction."

Other public officials ensnared in recent investigations include former state Senator Nathaniel Oaks, former Baltimore Police Commissioner Darryl DeSousa and former Delegate Cheryl Glenn. Federal investigators also sent many members of the Baltimore police Gun Trace Task Force to prison.

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