U.S.

Former Baltimore mayor pleads guilty to fraud and tax evasion charges

Updated on: November 21, 2019 / 9:25 PM EST / CBS/AP

Former Baltimore mayor pleads guilty in corruption scheme

Former Baltimore Mayor Catherine Pugh pleaded guilty Thursday to four charges of federal conspiracy and tax evasion in the "Healthy Holly" book scandal. In the 11-count indictment unsealed Wednesday, prosecutors said Pugh defrauded purchasers of her self-published "Healthy Holly" children's book series and used the money to fund her mayoral campaign.

Pugh, 69, pleaded not guilty to seven other charges involving wire fraud.

In court on Thursday, Hugh showed little emotion as she admitted to taking $100,000 from a connected businessman under the guise of "Healthy Holly" payments to buy herself a bigger house for entertaining once she became mayor, CBS Baltimore reported. She also admitted to funneling "Healthy Holly" money to her campaign out of fear she'd appear desperate if the public learned she was giving so much money to her campaign.

Pugh faces 35 years in prison. She is set to be sentenced in February.

U.S. Attorney Robert Hur said Pugh's guilty plea shows she betrayed the trust placed in her by the public.

Former Baltimore Mayor Catherine Pugh leaves the U.S. District Court after she was charged with wire fraud and tax evasion, related to sales of a self-published children's book, in Baltimore, Maryland, U.S. November 21, 2019. MICHAEL MCCOY / REUTERS

"The city of Baltimore faces many pressing issues and we need dedication and professionalism from our leaders — not fraud and corruption — if we're going to have any hope of fixing these problems," Hur said.

The indictment alleges Pugh conspired to evade taxes on the income received from the sales of "Healthy Holly" books, CBS Baltimore reported. According to the indictment, in tax year 2016, Pugh claimed her taxable income was $31,020 and the tax due was $4,168. In fact, Pugh's taxable income was $322,365, with an income tax due of approximately $102,444.

Pugh created false business expenses to offset the "Healthy Holly" income she received, and hid that from the IRS, investigators added. She allegedly did so by issuing "Healthy Holly" checks to Brown for services and products purportedly supplied by his company.

"The indictment alleges that Catherine Pugh betrayed the public's trust. The FBI will continue to diligently work to detect fraud and corruption and hold those who violate this trust accountable," said Jennifer Boone, special agent in charge of the FBI's Baltimore Division.

Pugh, a Democrat, was elected in 2016 and resigned in May after authorities began investigating whether she arranged bulk sales of "Healthy Holly" books to disguise kickbacks for political favors. Federal, state and local probes examined financial arraignments that netted Pugh hundreds of thousands of dollars over the years for her hard-to-find books. They were meant to be provided to schools and day care centers, but it's unclear where tens of thousands of copies ended up.

She took a leave from the mayor's office in early April, due to what her lawyer described as poor health following a bout of pneumonia. Her attorney, Steven Silverman, said then that Pugh was so fragile physically and mentally that she was unable to make "major decisions."

FBI and IRS agents raided her offices, homes and other locations in late April, seizing money transfer receipts, a laptop, compact discs and a $100,000 check from the University of Maryland Medical System to Pugh's "Healthy Holly" company.