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Crime Former Mayor Catherine Pugh indicted on 11 federal charges

18:55  20 november  2019
18:55  20 november  2019 Source:   wbaltv.com

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Federal prosecutors have charged former Baltimore Mayor Catherine Pugh with 11 counts of fraud, tax evasion and conspiracy in what they allege was a corrupt scheme involving her sales of a self-published children’s book series. In a grand jury indictment made public Wednesday

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Former Baltimore Mayor Catherine Pugh has been indicted on 11 federal charges involving the controversy over her children's books.

Catherine Pugh wearing a costume© WBAL\Phil Yacuboski Catherine Pugh

|| Link: Full indictment ||

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Pugh, 69, is federally charged with conspiracy to commit wire fraud, seven counts of wire fraud, conspiracy to defraud the United States, and two counts of tax evasion.

"She lied to the IRS in order to pay less in taxes," U.S. Attorney Robert Hur said. "She violated Maryland state election law which prohibits someone from making a campaign contribution in someone else's name."

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Pugh , 69, is charged with conspiracy to commit wire fraud, seven counts of wire fraud, conspiracy to defraud the United States and two counts of tax evasion. The indictment doesn’t contain big surprises, but it details how Pugh , as a state senator and as Baltimore mayor , allegedly devised and carried out

Catherine Pugh Pleads Guilty To Some Federal Charges In ‘Healthy Holly’ Scandal. Gary Brown, Jr., Roslyn Wedington Plead Guilty In Cases Connected Maryland U.S. Attorney Robert Hur announces an 11 -count indictment against former Baltimore Mayor Catherine Pugh at a news conference in

Pugh was charged on Nov. 14 and the charges were made public Wednesday.

"There are many victims in this case. The victims are all of us, the taxpayers and the people of Baltimore who expect and deserve integrity from their public officials. The people of Baltimore expect -- and they should expect -- that elected officials place the interests of their citizens above their own," Hur said.

Pugh is scheduled for an initial appearance and arraignment in U.S. District Court in Baltimore before U.S. District Judge Deborah K. Chasanow at 1 p.m. Thursday. Pugh is expected to self-surrender to the U.S. Marshals prior to the hearing.

The 11 News I-Team asked Pugh's attorney, Steve Silverman, for comment and whether Pugh will plead guilty. He had no comment and said he would address the second part of the question in court Thursday.

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Former Baltimore Mayor Catherine Pugh was indicted on multiple charges Wednesday, including wire fraud and tax evasion, in connection with the sales of her self-published children's books. The U.S. Attorney's Office in Maryland announced the charges in an 11 -count federal indictment alleging that

Catherine Elizabeth Pugh (born March 10, 1950) is an American former politician. A member of the Democratic Party, she served as the 50th mayor of Baltimore from 2016 to 2019, when she resigned amid a scandal that eventually led to criminal charges .

Hur said Pugh faces up to 20 years in federal prison for wire fraud conspiracy, up to five years for conspiracy to defraud the United States and up to five years for each of the two counts of tax evasion.

|| Link: Catherine Pugh book controversy: What you need to know ||

Pugh has been under investigation for her book deals through her Healthy Holly LLC that were made while she was a member of the University of Maryland Medical System Board of Directors. Pugh resigned from the UMMS board in March.

In April, the FBI and IRS executed search warrants at Pugh's homes, among other locations, and seized boxes of documents.

Pugh resigned as mayor in May, more than a month after taking a leave of absence for health reasons and amid scrutiny over her children's books.

The guilty pleas of former Baltimore City employees Gary Brown Jr., 38, of Baltimore, and Roslyn Wedington, 50, of Rosedale, were also unsealed Wednesday. On Nov. 13, Brown pleaded guilty to conspiracy to commit wire fraud and for each of the seven counts of wire fraud, two counts of conspiracy to defraud the United States and to filing a false tax return. That same day, Wedington pleaded guilty to conspiracy to defraud the United States and five counts of filing a false tax return.

Former Baltimore Mayor indicted on 11-counts of fraud, tax evasion charges

  Former Baltimore Mayor indicted on 11-counts of fraud, tax evasion charges The United States Attorney's Office for the District of Maryland has charged former Baltimore Mayor Catherine Pugh with 11 counts of Wire Fraud and Tax charges related to the selling of her children's book series Healthy Holly. “Our elected officials must place the interests of the citizens above their own,” said United States Attorney Robert K. Hur. “Corrupt public employees rip off the taxpayers and undermine everyone’s faith in government.  The U.S. Attorney’s Office and our law enforcement partners will zealously pursue those who abuse the taxpayers’ trust and bring them to justice.

Former Baltimore Mayor Catherine Pugh was hit with federal corruption charges Wednesday related to a shady children’s book deal that prompted her The 69-year-old Democrat, who became mayor of the beleaguered city in 2016, was indicted on 11 charges — conspiracy to commit wire fraud, seven

Former Baltimore Mayor Catherine Pugh is facing federal charges related to what prosecutors say was a plot to enrich herself through sales of her self-published children’s book series, according to a grand jury indictment made public Wednesday.

"The indictment alleges that from November 2011 until March 2019, Ms. Pugh conspired with Gary Brown to defraud purchases of Healthy Holly books in order to enrich themselves, promote Ms. Pugh's political career and fund her campaign for mayor," Hur said. "Mr. Brown helped Ms. Pugh solicit nonprofit organizations and foundations to buy the Healthy Holly books."

Hur said Pugh and Brown accepted payment for the books but did not deliver them; accepted payment for books and having them delivered but then converting those books for their own use without the buyers' knowledge; and double-selling books without either buyers' knowledge or consent.

"Ms. Pugh allegedly stored quantities of fraudulently obtained Healthy Holly books at various locations, including her residence, her state legislative offices in Annapolis and Baltimore City, her mayoral office at City Hall in Baltimore, the War Memorial building in Baltimore and a public storage locker used by her mayoral campaign," Hur said.

Hur explained where the proceeds from the sale of the books went to, saying, "Ms. Pugh allegedly used the proceeds of the sale of fraudulently obtained Healthy Holly books for her own purposes, including to fund straw donations to her mayoral election campaign and also to fund the purchase and renovation of her home in Baltimore City."

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In March 2018 Baltimore Mayor Catherine Pugh announced at that the city would send 60 buses to the march against guns in Washington DC. later in the Earlier this week the FBI and IRS agents executed search warrants at two homes of Mayor Catherine Pugh , one of her businesses, offices in City Hall

Former Baltimore Mayor Catherine Pugh has pleaded guilty to several federal charges in the "Healthy Holly" scandal that ultimately led to her resignation. Pugh , 69, pleaded guilty to four of the 11 charges , including conspiracy to commit wire fraud, conspiracy to defraud the U.S. government

On the charge of tax violations, Hur said, "The indictment alleges Ms. Pugh sought to evade the assessment of taxes for income generated from the sale of Healthy Holly books. According to the indictment, Ms. Pugh and Mr. Brown created the pretense of an ongoing business relationship between Healthy Holly and Mr. Brown's business. Ms. Pugh wrote checks to Mr. Brown for tens of thousands of dollars from Healthy Holly's bank account. Ms. Pugh allegedly told her tax preparer that the payments to Mr. Brown's business were for business services that he provided. She then instructed the tax preparer to deduct those payments as business expenses in order to lower her tax liability. However, these payments from Healthy Holly LLC to Mr. Brown's business were not for business services. In reality, Mr. Brown's business provided no services or products at all to Healthy Holly LLC. This was a ruse, according to the indictment."

Hur said Pugh filed false tax returns in 2015 and 2016 in which she under-reported her income.

"The indictment alleges, for the tax year 2016, Ms. Pugh claimed her taxable income was a little over $31,000 and the tax due was a little over $4,000, when in fact her taxable income was over $322,000 with an income tax due of approximately over $100,000. In other words, her taxable income was more than 10 times what she reported to the IRS for that year and she owed more than 20 times more in taxes than she actually paid for that year."

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Below are the details of the indictment as released by the U.S. Attorney's Office:

Wire Fraud Allegations

The indictment alleges that from November 2011 until March 2019, Pugh conspired with Gary Brown to defraud purchasers of Healthy Holly books in order to enrich themselves, promote Pugh’s political career, and fund her campaign for mayor. The indictment alleges that the conspirators employed several methods to defraud, including: not delivering books after accepting payments for the books; accepting payments for books to be delivered to a third party on behalf of a purchaser, then converting some or all of the purchased books to their own use without the purchaser’s or third party's knowledge; and by double-selling books without either purchaser’s knowledge or consent. Pugh allegedly stored quantities of fraudulently obtained Healthy Holly books at various locations, including Pugh's residence, her state legislative offices, her mayoral office, and a public storage locker used by Pugh's mayoral campaign. The indictment alleges that Pugh used the proceeds of the sale of fraudulently obtained Healthy Holly books for her own purposes, including: to fund straw donations to Pugh's mayoral election campaign; and to fund the purchase and renovation of a house in Baltimore City.

Conspiracy to Defraud the United States/Tax Evasion

Further, the indictment alleges that Pugh issued Healthy Holly checks payable to Brown, for the purpose of funding straw donations to the Committee to Elect Catherine Pugh. The indictment alleges the Brown cashed that checks and used the untraceable cash to fund money orders, debit cards, and personal checks in the names of straw donors totaling approximately $35,800. The straw donations purchased with the cash were allegedly then deposited into the bank account of the Committee to Elect Catherine Pugh. The indictment alleges that Pugh wrote additional Healthy Holly checks to Brown totaling $26,300, which he cashed and gave the cash to Pugh. On Jan. 11, 2017, Brown was charged with, and ultimately convicted of, violating Maryland's election laws for funneling $18,000 of the straw donations to Pugh's campaign. The Committee to Elect Catherine Pugh issued five checks in the names of three of the straw donors, with a notation in the memo line on each check stating "returned contribution." The indictment alleges that none of the straw donors received any of the returned money, and instead, at Pugh's direction, Brown used the money to pay for his legal defense.

Catherine Pugh Pleads Guilty To Some Federal Charges In ‘Healthy Holly’ Scandal

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In addition, the indictment alleges that Pugh conspired to evade taxes on the income received from the sales of Healthy Holly books. The indictment alleges that to accomplish this, Pugh concealed from the IRS the fact that she created false business expenses to offset the income she received from the sale of books by issuing Healthy Holly checks to Brown for services and/or products purportedly supplied by his company. Pugh allegedly filed false income tax returns for 2016 and 2015, in which she under-reported her income. For example, the indictment alleges that for tax year 2016 Pugh claimed her taxable income was $31,020 and the tax due was $4,168, when in fact, Pugh's taxable income was $322,365, with an income tax due of approximately $102,444.

Brown Wire Fraud Conspiracy

According to Brown's plea agreement, from November 2011 until March 2019, he conspired with Pugh to fraudulently sell and distribute tens of thousands of Healthy Holly books. Brown admitted that over that period they executed the scheme in three ways: by selling the books, keeping the money and not delivering the books; provided books to purchasers, but later converted them to their own use at campaign events and government functions; and resold books that had previously been purchased and donated to the Baltimore City Public Schools.

Brown Conspiracy with Pugh to Defraud the United States

Further, as detailed in his plea agreement, Brown cashed checks Pugh wrote to him from the Healthy Holly account, then used the cash to fund money orders, debit cards, and personal checks in the names of straw donors, which were then submitted to the Committee to Elect Catherine Pugh. Brown also admitted that he cashed some of the Healthy Holly checks and gave the cash to Pugh. To conceal the straw-donation scheme and avoid paying taxes that might result from the scheme, Pugh and Brown provided false information to the IRS regarding the purpose of the Healthy Holly checks.

The case against Catherine Pugh: Her ‘Healthy Holly’ problem wasn’t sloppy bookkeeping. It was corruption.

  The case against Catherine Pugh: Her ‘Healthy Holly’ problem wasn’t sloppy bookkeeping. It was corruption. When the scandal involving then-Baltimore Mayor Catherine Pugh’s self-published children’s books broke last spring, she was adamant she had done nothing wrong. Any issues concerning her little-known side business selling the clumsily edited “Healthy Holly” series could be explained by sloppiness, not corruption, she argued. Why hadn’t she fully disclosed her business dealings? An aide must have messed up her ethics forms, she said. Why hadn’t she printed thousands of the books as ordered? A different associate had taken ill, she explained. Why were so many books missing? The Baltimore school system must be to blame for losing them, she insisted.

Brown and Wedington Conspiracy to Defraud the United States/Filing False Tax Returns

Brown and Wedington both admitted that they conspired to avoid tax withholdings from Wedington's payroll checks while Wedington was the executive director of the Maryland Center for Adult Training (MCAT) and Brown was the chairman of the board of directors. Specifically, in 2013, Wedington's salary was garnished due to outstanding student loan debt and medical bills. In order to avoid further garnishments, Wedington asked Brown to take her "off payroll," which meant that MCAT would no longer submit her name to the payroll service provider for the purpose of calculating taxes to be withheld from her salary. Brown agreed to the arrangement and had MCAT make electronic deposits into his personal bank account in an amount that exceeded the annual salary owed to Wedington, creating the pretense that he was doing work for MCAT as an independent contractor. Brown then wrote checks to Wedington and/or gave her cash equal to or greater than her salary, which was more than $80,000 per year. No taxes were withheld from the funds Brown paid to Wedington, nor did her salary go through Wedington's bank account, where it could be garnished. In addition, Brown prepared fraudulent tax returns for Wedington for tax years 2013 through 2017, which did not report Wedington's MCAT income and made a variety of false entries, resulting in refunds to which Wedington was not entitled and avoiding over $121,000 in total taxes due and owing. Brown also filed a false individual income tax return for tax year 2016 for himself, which falsely listed the $64,325 of Healthy Holly payments as business income. In addition, from 2016 through 2018, Brown worked part-time as a freelance tax preparer and charged a fee to prepare dozens of tax returns that he filed on behalf of his family, friends, and associates. Brown included false information in all of those tax returns in order to obtain larger refunds for his customers. The fraudulently obtained refunds totaled more than $100,000.

Stay with WBALTV.com and 11 News for more on this developing story.

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The case against Catherine Pugh: Her ‘Healthy Holly’ problem wasn’t sloppy bookkeeping. It was corruption. .
When the scandal involving then-Baltimore Mayor Catherine Pugh’s self-published children’s books broke last spring, she was adamant she had done nothing wrong. Any issues concerning her little-known side business selling the clumsily edited “Healthy Holly” series could be explained by sloppiness, not corruption, she argued. Why hadn’t she fully disclosed her business dealings? An aide must have messed up her ethics forms, she said. Why hadn’t she printed thousands of the books as ordered? A different associate had taken ill, she explained. Why were so many books missing? The Baltimore school system must be to blame for losing them, she insisted.

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