Former Baltimore Mayor Pugh Faces Multiple Charges Over Bookgate Scandal

Update: As of November 21, 2019, various news sources are reporting that Former Mayor Pugh has pleaded guilty to four of the 11 charges in an executed plea deal. According to these reports, she pleaded guilty to at least one charge of tax evasion.

Earlier this year, we reported the first public display of federal law involvement in what has been coined "Bookgate."1 At that time, FBI and IRS agents executed search warrants and raided Baltimore Mayor Pugh's home, and other locations amid the corruption scandal centered around Mayor Pugh's questionable sales of her self-published "Healthy Holly" books. Shortly after the raid, Maryland Governor Hogan called on Mayor Pugh to resign from office-which she did.

Most recently, on November 20, 2019, The United States Attorney's Office for the District of Maryland (U.S. Attorney's Office in Maryland) released an announcement stating that former Mayor Pugh has indeed been indicted by a federal grand jury on multiple counts of fraud, conspiracy and tax evasion-all related to the Bookgate scandal.2

Regarding the two counts of tax evasion, the announcement notes that the indictment alleges an involved conspiracy to evade taxes from the book sales. Specifically, the U.S. Attorney's Office in Maryland states:

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 underreported 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.

If convicted, Pugh faces potentially long prison sentences. While conviction for the wire fraud conspiracy has the potential for the longest sentence-i.e., a maximum of 20 years for each of those seven counts-she could also face five years for each of the two tax evasion counts.

The U.S. Attorney's Office in Maryland reiterated the requirement that elected officials' personal interests must not surpass the interests of those citizens they represent. United States Attorney Hur emphasized that:

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.

Readers should remember, as the announcement indicates, that an indictment is not a guilty verdict. Pugh remains presumed innocent unless proven guilty.

If you have questions or concerns about tax matters, contact Frost & Associates, LLC today at 410-497-5947.



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