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How the Pugh/UMMS scandal was rooted in privatization and lax ethics rules

Accountabilityby Mark Reutter9:52 amMar 18, 20190

Catherine Pugh’s connections to UMMS – long and lucrative

The University of Maryland Medical System’s payments for Pugh’s “Healthy Holly” books fit a pattern of financial support that helped put her in the mayor’s office in the first place

Above: Mayor Catherine Pugh is front and center in this group photo of the UMMS board. (umms.org)

The disclosure that the University of Maryland Medical System paid $500,000 to Baltimore Mayor Catherine Pugh – who sat on its board for 18 years until her resignation this morning (see below) – shouldn’t come as a total surprise.

In explaining its payments to the mayor, UMMS said the money helped her print and distribute 100,000 copies of her self-published “Healthy Holly” books to Baltimore schoolchildren.

This was not a one off.

Pugh’s financial and political ties with UMMS go much deeper than the book payments.

During the 2016 election, high-level representatives of UMMS – a private corporation that operates the University of Maryland Medical Center and Midtown campus in Baltimore – went to considerable lengths to pave the way for Pugh’s success as a mayoral candidate.

Most notably, three directors of UMMS lent Pugh $200,000 just days before the April 26, 2016 Democratic primary.

The cash influx allowed her campaign to offer free meals, transportation to early polling sites and money – what opponents decried  as “walk-around money” – to precinct workers who brought voters to the polls.

The loans – once they were revealed in campaign disclosure documents – were credited by many as getting Pugh over the finish line, clutching a narrow victory over former Mayor Sheila Dixon.

This morning Mayor Pugh issued this statement through her press office.

Mayor Pugh issued this statement on Monday morning, March 18.

Follow the Money

To get a better sense of the ties binding UMMS to Pugh, we have re-reviewed the financial disclosure records posted by the Maryland Board of Elections.

For starters, we traced $68,150 in cash donations to Pugh by administrators and directors associated with UMMS during the campaign.

That was many times more money than offered to all mayoral candidates by representatives of the Johns Hopkins Medical System and MedStar Health, the city’s two other large hospital organizations.

Strong ties to UM Medical System bring Pugh campaign cash (3/5/16)
Developer Paterakis orchestrates $130,000 in campaign contributions to Sheila Dixon (3/29/16)
A governor, a mayor and a probable mayor gather in Vegas (5/23/16)
Pest control mogul gave over $100,000 to Maryland politicians (5/27/16)
Guess who loaned $100,000 to Pugh campaign? (6/10/16)
Pugh to hold fundraiser to pay off campaign debt (6/10/16)
Pugh raked in more than $1M before and after the primary (8/31/16)

Slightly under $40,000 of these contributions were made by 17 members of the UMMS board of directors.

Pugh was appointed to the board in 2001 for a five-year term by then-Governor Parris N. Glendening.

Before today’s resignation, she was approaching her 19th year as a UMMS director.

When she first took her seat, Pugh was a backbench city councilwoman brimming with ambition. In 2005, she got appointed to a vacancy in the House of Delegates, and, by 2007, she was the state Senator from West Baltimore’s 40th District.

Pugh campaign poster during the 2016 election. (Committee to Elect Catherine E. Pugh)

Campaign poster during the 2016 election. (Committee to Elect Catherine E. Pugh)

Power of the Purse

It wasn’t long before she was in the driver’s seat. As chair of the health subcommittee of the Senate Finance Committee, she had the power to review and approve – or, on the other hand, stall from a floor vote – millions of dollars in state aid headed to UMMS-affiliated hospitals.

Back in 2011, she had lost badly to incumbent Mayor Stephanie Rawlings-Blake. When Rawlings-Blake announced in September 2015 that she would not run for re-election, Pugh was ready.

And her friends at UMMS were, too.

Chart, UMMS contributions to Pugh 2016 (FINAL)Veteran UMMS director Francis X. Kelly – who helped privatize University Hospital and create UMMS as a Baltimore County state senator in 1984 – held a fundraiser for Pugh at his Hunt Valley insurance offices in October 2015.

Pugh raised more than $75,000 from the event. Asked about her approach to fundraising, she said at the time: “I send notices out to the entire list of people I know. Whoever comes, comes.”

At this particular fundraiser, “people from University of Maryland, people from insurance companies, and just people who support me generally” came, she told us.

Opening the Checkbook

Kelly and his wife, Janet, chipped in $6,000, the maximum individual donation allowable in a four-year election cycle.

UMMS board chairman Stephen Burch added another $5,000.

Other UMMS contributors included the system’s executive vice president Henry Franey ($1,000), senior vice president Stephen T. Bartlett ($1,000), chief strategy officer Alison G. Brown ($1,000), senior development officer Janice Eisele ($1,000), general counsel Megan Arthur ($1,000), and vice president of external affairs Mark L. Wasserman ($1,000).

Other individual contributions came from Katherine Jennings ($2,500) and Nora Linstrom ($5,000), both of whom were identified in Pugh’s finance report as “UMMS – healthcare.” (Linstrom by the way, is also the wife of UMMS board chairman Burch.)

By the end of the 2016 election cycle, UMMS president and CEO Robert A. Chrencik had given $4,000 to Baltimore’s next mayor.

To the Rescue

The Kelly fundraiser helped solidify Pugh’s early position as a top-tier candidate. But as the Democratic Party primary approached (the only election that counts in one-party-rule Baltimore), Pugh was unable to break out as the clear front runner.

She faced Dixon’s cadre of volunteers and Paterakis-engorged campaign coffers, a one-two punch that could thwart her best hope to win City Hall.

In stepped UMMS chairman Burch – who accepted her resignation from the board today – and two “juniors” with lengthy local political pedigrees – Walter A. Tilley Jr. and James T. Smith Jr.

Tilley was the scion of Baltimore’s “Honorary Rat Catcher,” an accolade given to his father by Baltimore Mayor Thomas D’Alesandro.

The younger Tilley had expanded the family’s Home Paramount pest control business while cultivating connections to enlarge his Harford County political base.

Smith, a former Baltimore County judge,  two-term county executive and Maryland transportation secretary, was appointed to the UMMS board by Governor Martin O’Malley in 2011.

Burch and Tilley loaned Pugh’s campaign $50,000 apiece, while Smith’s Victory Slate topped it off $100,000 more.

Burch and Tilley dug into their pockets and loaned Pugh’s campaign $50,000 apiece sometime around mid-April 2016 (Pugh’s campaign reports are vague on the exact date).

Smith added $100,000 more, not from his own pocket, but from the “Baltimore County Victory Slate” where he had parked $476,000 in campaign funds after he had closed down his “Friends of Jim Smith.”

Loans to Pugh campaign in the final days before the April 2016 Democratic Party primary for mayor. (Committee to Elect Catherine E. Pugh)

Loans to the Pugh campaign days before the April 2016 Democratic Party primary for mayor. (Committee to Elect Catherine E. Pugh, Campaign Finance Report Summary)

Leaving on a Jet Plane

Pugh won the Democratic primary in April 2016. A month later, she took a victory lap at the International Council of Shopping Centers convention in Las Vegas – flying back and forth not on Southwest, but on the private jet of Walter Tilley.

Jim Smith met her at the Maryland Party, the gala event staged at the Wynn Las Vegas by Howard L. Perlow, a convicted embezzler who was pardoned by Glendening in 2002.

The Smith loan to Pugh was revealed by The Brew in June 2016, months before the state-required finance report would confirm the transaction.

The Pugh campaign repaid the loans in full, with interest, following a pre-general election fundraiser held at the Baltimore Convention Center. The event netted her over $600,000.

Pugh smiles at the Wynn Resort in Las Vegas while attending the 2016 Maryland Party with Jim Smith (left) and Caves Valley principal Arsh Mirmiran. (Brew photo files)

Pugh smiles at the Wynn Resortwhile attending the 2016 Maryland Party in Las Vegas with Jim Smith and Caves Valley principal Arsh Mirmiran. (Brew file photo)

The Dust Settles

After becoming mayor, Pugh named Jim Smith her “chief of strategic alliances,” a new position at City Hall.

Last year, Smith collected $180,421.25 in salary, making him one of the best paid employees in Baltimore government.

Meanwhile, Walter Tilley Jr. followed in his father’s footsteps and was named Baltimore’s new “Honorary Rat Catcher” by Pugh.

As she took up residence at City Hall, she was also cashing checks from UMMS that apparently paid for the printing of her self-published “Healthy Holly” books.

Last week we learned that, while Baltimore’s mayor in 2017 and 2018, she received $200,000 from the hospital system, reportedly for a fresh run of 40,000 copies of her books.

New Clouds Form

How all of this worked out – the payments issued by UMMS to the mayor’s Healthy Holly LLC for thousands of paperback books not available on Amazon and not currently distributed by Baltimore City Schools – remains a mystery.

We have asked UMMS for the contract between the institution and the mayor, the invoices of payments for the books, and copies of checks issued to Pugh and/or her LLC.

We got back this response:

“There are no contracts for the purchase on the Healthy Holly books, which is a sole-source purchase given the uniqueness of the book. According to our financial records, the Medical System has purchased 100,000 books since 2011 at a total cost of $500,000. The Medical System strongly believes in and supports promoting healthy lifestyles for Baltimore’s schoolchildren.”

Our requests to the mayor’s office to review any signed contracts and MOUs between Pugh/Healthy Holly LLC and UMMS – as well as information about the printing, sale and distribution of the books – have gone unanswered.

But asked during the mayoral election how she accounts for her ability to raise so much money from influential people, Pugh said this:

“I’m not 21 years old. I’ve been around a long time. I know a lot of people, and I have a long database.”
To reach this reporter: reuttermark@yahoo.com

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