State Prosecutor Alleges Mayor Pugh Took Out Improper Loan For Campaign

BALTIMORE (WJZ) -- Baltimore's first truly competitive mayoral race in years lead to a last-minute campaign rush for cash. The state prosecutor is looking to an improper loan taken out by Mayor Catherine Pugh.

With big spending for ads with no incumbent, and a showdown with former mayor Sheila Dixon, big money came pouring into Catherine Pugh's campaign, including $315,000 dollars in loans.

Our media partner, The Baltimore Sun, reports that one loan, made just six days before the primary, is now under investigation by the state prosecutor. It's the latest scandal involving Pugh's campaign's finances.

Pugh herself is not accused of doing anything wrong and earlier this month spoke about her fundraising.

"Let me just be real clear. We know that things happen. We raised over 2 million dollars, and if there is anything wrong with the funds that we received, they will go back," says Mayor Pugh.

The state prosecutor's latest allegation stems from a $100,000 dollar loan Pugh's campaign received from "The Baltimore County Victory Slate," which includes a group of candidates who can share money without limits.

But the state prosecutor argues Pugh was not a member of the slate at the time. And because of this, the loan was improper.

And there's more: the money came from the campaign coffers of former Baltimore county executive Jim Smith--who's now working on the mayor's team at City Hall, making $175,000 dollars a year.

Smith is not accused of any wrongdoing and the loan has since been repaid.

Baltimore lawyer Daniel Miller has worked on similar complex financial cases.

"It's very important to make sure we know whose hand is in whose pocket and why," says Miller.

The punishment for the loan is a $3,000 fine. It is the second open investigation into mayor pugh's campaign finances.

Pugh's close aide Gary Brown remains on her staff while he's under indictment.

The state prosecutor alleges Brown funneled money to relatives, who then donated it to Pugh -- triple the limit for an individual donor.

A key question remains: where did brown get the money. So far, he's not talking publicly about the case.

"It's something you have to be right about because you could destroy someone's life, someone's career," says Miller.

Mayor Pugh has not been charged with any wrongdoing.

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