FBI, IRS agents search Baltimore Mayor Catherine Pugh's homes, City Hall

Pugh went on leave April 1, saying she needed time off to recover from pneumonia. She's also facing intense scrutiny over the sale of her children's books to entities that do business with the city.
Catherine Pugh
Baltimore Mayor Catherine Pugh speaks at her inauguration ceremony on Dec. 6, 2016.Patrick Semansky / AP file

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By Associated Press

BALTIMORE — Numerous federal agents raided homes and City Hall offices of Baltimore's embattled mayor on Thursday, amid dramatically widening investigations to determine whether she used bulk sales of her obscure self-published children's books to disguise kickbacks.

The multiple searches pushed the latest political scandal for Maryland's largest city to a crescendo after weeks of uncertainty and mounting pressure for Baltimore Mayor Catherine Pugh to step down.

The politically isolated first-term mayor slipped out of sight April 1, citing deteriorating health due to a bout of pneumonia.

Gov. Larry Hogan joined calls for her immediate resignation Thursday, as agents with the FBI and the IRS criminal division carried boxes of evidence out of City Hall.

"Mayor Pugh has lost the public trust. She is clearly not fit to lead," Hogan declared in a statement. "For the good of the city, Mayor Pugh must resign."

Agents also scoured her two Baltimore homes, the home of an aide and the office of a nonprofit organization she once led.

The mayor's attorney, Steve Silverman, said federal agents came to his city law firm Thursday morning to serve a subpoena for her original financial records.

They were directed to a sequestered area where Pugh's documents were kept, he said, and they did not seek any attorney-client privileged communications.

Thursday's raids, launched at 6:30 a.m., also targeted the home of former mayoral aide Gary Brown Jr., NBC affiliate WBAL reported.

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Brown and two other Pugh aides, Poetri Deal and Afra Vance-White, were fired from their City Hall posts on Wednesday by veteran City Council leader, Bernard "Jack" Young, who is serving as acting mayor.

While no specific allegations have been made against those now-former three staffers, they're listed as board members of the Maryland Center for Adult Training, a nonprofit once chaired by Pugh and city funds both before and after the mayor took office, WBAL reported.

University of Maryland Medical System spokesman Michael Schwartzberg disclosed that the medical system received a grand jury witness subpoena seeking documents and information related to Pugh.

In recent weeks, Pugh's fractured administration has staggered from one crisis to another. Days before announcing her departure on an indefinite leave of absence, Pugh held a hastily organized press conference where she called her no-contract book deals a well-intentioned but "regrettable mistake."

Others have been less charitable about the murky arrangements that earned $800,000 for her "Healthy Holly" limited liability company. Maryland's chief accountant called Pugh's "self-dealing" book deals "brazen, cartoonish corruption."

For years, Pugh had somehow negotiated lucrative deals to sell her "Healthy Holly" books to customers that included the hospital network she once helped oversee and a major health plan that does business with the city.

She sold $500,000 worth of the illustrated paperbacks to the University of Maryland Medical System, on whose board she sat for nearly 20 years. She also made $300,000 in bulk sales to other customers including two major health carriers that did business with the city.

The revelation of a major federal investigation comes amid a criminal investigation by the state prosecutor's office, which probes public corruption in Maryland. Other probes include a review by the city ethics board and the Maryland Insurance Administration.

It's been more than three weeks since Pugh slipped out of sight.

Her main spokesman, James Bentley, said he hasn't spoken with her and doesn't even know where she is.

Her lawyer, says his firm "will continue to vigorously defend the mayor, who is entitled the presumption of innocence."

Political analysts say Pugh's biggest bargaining chip is her refusal to resign from the mayor's office.

Only a conviction can trigger a mayor's removal from office, according to the city solicitor. Baltimore's mayor-friendly City Charter currently provides no options for ousting its executive.

City Council member Brandon Scott said an exhausted Baltimore has had enough. He reiterated the council's unanimous demand for her resignation, calling the spectacle of the raids "an embarrassment to the city."

"The mayor should resign. We have too many issues facing the city of Baltimore that require the full-time attention of a full-time mayor," Scott said.

Pugh came to office in late 2016 after edging out her running mate, ex-Mayor Sheila Dixon, who had spent much of her tenure fighting corruption charges before being forced to depart office in 2010 as part of a plea deal connected to the misappropriation of about $500 in gift cards meant for needy families.

Pugh would certainly face a bruising 2020 Democratic primary if she were to return and run for reelection.

Council leader Young said as she went on leave that he would merely be a placeholder. But this week, before the raids, he said "it could be devastating for her" if she tried to return.

David K. Li contributed.