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Then-State Sen. Catherine Pugh speaks during a TV interview near the City Hall in Baltimore, May 2, 2015. Pugh, now mayor ...

Baltimore mayor takes leave of absence amid book sales scandal

BALTIMORE — “Healthy Holly” is a polite African American girl with devoted parents and a curious little brother. She loves exercise. She craves fresh fruit and vegetables. And she’s now the bane of Baltimore Mayor Catherine Pugh’s existence.

Since the state prosecutor’s office began a criminal investigation into Pugh at the Maryland governor’s request earlier this week, there’s been a growing tide of examinations spurred by revelations that she was paid roughly $700,000 over roughly eight years for her self-published paperback series about the fictional “Healthy Holly.”

The first-term Democratic mayor went on an indefinite leave of absence amid the accelerating scandal involving the sale of her obscure books to a $4 billion hospital network she once helped oversee and a major health plan that does business with the city.

Acting Mayor Bernard “Jack” Young, who has taken over Pugh’s day-to-day responsibilities since she went on leave citing deteriorating health, told reporters Wednesday he’s directed Baltimore’s law department to pull roughly 90 of the most recently authorized city contracts for review. Pending contracts before the city’s spending board will also be reviewed.

Pugh abruptly retreated to her home amid multiple calls for investigations of her highly lucrative book deals, including a $500,000 arrangement with the University of Maryland Medical System. There was no contract behind the deal and the hospital network described some of the purchases as “grants” in federal filings.

Pugh, who sat on a state Senate committee that funded the major health network before becoming mayor, starting serving on the system’s board in 2001. She stepped down from the volunteer board last month and returned her most recent payment of $100,000.

Pressure on Pugh ratcheted up dramatically after Kaiser Permanente disclosed Monday that it paid her limited liability company about $114,000 between 2015 and 2018 for roughly 20,000 copies of her illustrated books. Another city health provider, CareFirst BlueCross BlueShield, said it made contributions to Associated Black Charities, a Baltimore nonprofit that manages the city’s taxpayer-funded Children and Youth Fund, to purchase and distribute books. The charitable nonprofit said five organizations donated $87,180 to pay for the books, of which Associated Black Charities kept $9,552 to use as “general support.”

One of those groups was apparently the quasi-public Maryland Automobile Insurance Fund, whose former executive director, M. Kent Krabbe, authorized a $7,500 donation in 2012, shortly before Pugh — then a state senator — successfully sponsored legislation supported by the company. That donation was first reported by the Baltimore Business Journal.

Krabbe left his leadership role at the car insurance fund in 2015, eventually becoming a director of Pugh’s inaugural committee in 2016 and then joining the Baltimore Department of Transportation as operations manager for special events, a newly created position that came with a $107,100 salary. He could not be reached for comment.

Mark McCurdy, the current director of the state’s car insurer of last resort, said there was nothing in their records to say why Krabbe had the auto insurance carrier write a check to Pugh’s Healthy Holly company for its outreach program with Associated Black Charities.

“On the surface, it’s not the kind of donation that fits our philosophy,” said McCurdy, stressing that the car insurance fund never received or distributed any Healthy Holly books.

Al Redmer, Maryland’s insurance commissioner, told The Associated Press that his regulatory agency is now looking at Kaiser Permanente, CareFirst BlueCross BlueShield, and the car insurance fund for any possibility of wrongdoing.

“To the extent that any insurance carrier would divert funds away from that mission is something that could be concerning based on the facts,” Redmer said in a phone interview. “Our role is to make sure that entities that we regulate have in no way violated the law or regulations. So we’re going to do a review and make sure that that’s the case.”

Kaiser did not immediately respond to an email seeking comment about Redmer’s investigation, while CareFirst declined to comment. Pugh’s attorney has said she looks forward to cooperating with the state prosecutor’s probe and will provide “as much information as possible to put this matter to rest.”

Meanwhile, the University of Maryland Medical System’s acting CEO has announced that the former state Sen. Francis X. Kelly and two of his sons would also take voluntary leaves from boards of six affiliated organizations. Kelly & Associates Insurance Group has done millions of dollars in business with the hospitals.

About one-third of UMMS board members received compensation through the medical system’s arrangements with their businesses. Legislation is pending in Maryland’s capital focusing on board governance.