November 21, 2019 / 7:27 PM / 20 days ago

UPDATE 2-Former Baltimore mayor pleads guilty in book sales scandal

(Adds details, background)

By Donna Owens

BALTIMORE, Nov 21 (Reuters) - Former Baltimore Mayor Catherine Pugh pleaded guilty on Thursday to tax evasion and other federal charges related to sales of self-published children’s books as part of an illegal scheme to fund her political career.

The charges stem from the sale of thousands of copies of the “Healthy Holly” book series to a medical system where Pugh served on the board and to other buyers who had business with the state or city. Prosecutors allege Pugh disguised the proceeds of the sales as donations to her mayoral election campaign and used some of the money to help her to purchase and renovate a house.

The former mayor was elected to a four-year term in 2016 after gaining prominence as a state lawmaker during protests over the 2015 death of Freddie Gray, a 25-year-old black man who died while in police custody.

Pugh, 69, who initially defended the arrangement, called it a “regrettable mistake” in March and resigned in May.

Pugh on Thursday entered the plea on two counts of tax evasion, and one count each of conspiracy to commit wire fraud and conspiracy to defraud the United States. She pleaded not guilty to charges of wire fraud.

Under the fraudulent scheme, Pugh failed to deliver books after accepting payment for them and intentionally double-sold books to others, prosecutors alleged. She then used the money to advance her political career or pay for personal expenses, in violation of federal law.

She also filed false tax returns that failed to report hundreds of thousands of dollars in income, prosecutors charged.

Prosecutors said the conspiracy began when Pugh was a state representative and persisted after her election as mayor.

The former mayor appeared in a packed court room in Baltimore on Thursday afternoon dressed in dark clothing and flanked by her attorneys.

After entering the plea, she was released pending her sentencing, scheduled on Feb. 27, after surrendering her passport and other standard restrictions.

The two sides have agreed to a “downward adjustment” for some of the charges because of Pugh’s “acceptance of responsibility,” Judge Deborah Chasanow said at the hearing.

If convicted, Pugh faces a maximum sentence of 20 years in prison for the wire fraud conspiracy and for each count of wire fraud. The two counts of tax evasion and the count of conspiracy to defraud the United States each carry a maximum sentence of five years.

Reporting by Donna Owens in Baltimore; Additional reporting and writing by Maria Caspani; Editing by Frank McGurty, Bill Berkrot and Cynthia Osterman

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