'Healthy Holly' Fallout: Baltimore's Board Of Estimates Could End All Contracts With Grant Capital Management Over Involvement In Scandal
BALTIMORE (WJZ) -- Baltimore's Office of the Inspector General released the findings of its investigation into the city's deals with a local businessman linked to the Catherine Pugh "Healthy Holly" book scandal Tuesday.
City Council President Brandon Scott asked the city to investigate all contracts in the last five years with Grant Capital Management back in December after it was revealed that James Preston (J.P.) Grant was a book purchaser involved in the Healthy Holly scandal.
This request came two weeks after Pugh pleaded guilty to conspiracy to commit wire fraud, conspiracy to defraud the United States and two counts of tax evasion.
The charges stemmed from the scheme to sell her "Healthy Holly" books to organizations and people with businesses before the state and the city when she was a state senator and later mayor.
Federal prosecutors said Grant illegally funneled a total of $170,000 to Pugh's through her two companies Healthy Holly, LLC and 2 Chic Boutique, LLC between January 2016 and October 2016.
Pugh used the payments to fund the purchase of a home, to make illegal straw donations to her 2016 mayoral campaign and to pay for other personal and business expenses. Pugh pleaded guilty to DOJ's charges on November 21, 2019, and was sentenced to three years in a federal prison in Alabama, where she is currently serving time.
OIG said the monetary transactions described in the federal case were accurate and Grant also didn't refute the details when questioned by city investigators.
The city had a master lease agreement with Grant Capital Management, Inc. since 2003 with no end date. Only one other company competed with GCM for financing deals with the city and the most recent deal awarded to GCM was approved by the Board of Estimates on Dec. 11, 2019.
A master lease agreement is put in place to help the city make large purchases like vehicles, telecommunication and lighting systems. It helps the city maintain its cash flow by allowing them to pay for the purchases over a span of several years. The city has made 41 deals with its current MLA since 2004.
The investigation also revealed that the city's Bureau of Procurement published a Request for Proposal for a new master lease agreement in December 2017. GCM was the sole company awarded the contract by BOE in December of 2018. However, since that deal as yet to be finalized, any new leases were only done under the 2003 agreement.
The OIG investigation found that GCM should not have been considered for the 2018 MLA award because they did not file a campaign finance disclosure as required by Maryland law. But GCM filed a false affidavit saying it did disclose their campaign donations.
City investigators also confirmed the Department of Justice's timeline in regards to payments made by Grant to Pugh.
"The OIG finds that while the first two payments by Grant to Pugh were made prior to the 2016 primary elections, the $100,000 payment came after Pugh had become the Democratic nominee," the report said. "Grant's payments appear to have been made with the intent to buy political influence and/or in direct exchange for political influence."
During an interview with OIG, Grant declined to answer questions related to his payment to Pugh, citing ongoing legal issues. But Grant said the payments he made to Pugh were atypical and maintained he "never made illegal payments or provided illegal benefits to any other City elected official or employee."
In a letter to city leaders, OIG recommended that GCM's current bid for the master lease agreement be rejected, that its most recent award be revoked and that the board be asked " to decide whether proceedings be instituted to determine whether the company and/or its executive leadership should be barred from doing business with the City of Baltimore."
Read the full report: Grant Capital OIG Investigation
