Behind The Scenes Of A Baltimore Corruption Scandal

April 15, 2019

State Senator Jill Carter and investigative reporters Luke Broadwater and Fern Shen discuss how "Healthy Holly" has shaken up Baltimore politics and local elites

State Senator Jill Carter and investigative reporters Luke Broadwater and Fern Shen discuss how "Healthy Holly" has shaken up Baltimore politics and local elites


Behind The Scenes Of A Baltimore Corruption Scandal

Story Transcript

JAISAL NOOR: Welcome to The Real News. I’m Jaisal Noor in Baltimore.

It’s a scandal that’s shaken a city that’s no stranger to them. It’s ensnared the mayor and many powerful figures in Maryland’s political and business establishment. And now the confirmation of a criminal probe. All of these developments are the results of a series of questionable book deals by Mayor Catherine Pugh. Now Pugh, who is currently on medical leave, is facing growing calls to step down amidst allegations of self-dealing and conflicts of interests. Pugh sold at least $800,000 worth of her Healthy Holly series of children’s books to corporations she was tasked with overseeing as state senator, like the University of Maryland Medical System where she also served on the board, or that got lucrative multimillion dollar contracts with the city. The question now is how much more will the scandal reveal, and will it prompt reform of institutions like the city’s all-powerful mayor?

Well, joining me now to discuss this are some of the figures responsible for bringing this all to light. State Senator Jill Carter, Baltimore Sun politics reporter Luke Broadwater, who broke the story, and Baltimore Brew editor and publisher Fern Shen. Thank you all for joining us.

Thank you.

Thanks for having us.

JAISAL NOOR: So, Luke, let’s start with you. You first broke this story and brought this to light. Talk about how this unfolded, and lay out what your reporting found.

LUKE BROADWATER: Sure. Well, the reason we got started reporting on this was Senator Carter reached out to me, and she said “I have this bill in about the University of Maryland Medical System. I have some questions about the contracting practices that are going on there. There’s a minority contractor in my district who is having trouble penetrating the system; it seems kind of opaque. It seems like insiders are getting the deals, and that’s not really a fair process. And I’m having trouble getting any of the documents to back up what I believe may be the case. Can you look into it for me?” I said, “Of course, Senator.”

And so I reached out to the University of Maryland Medical System. And I said, hey, can I have your list of all your board members, what kind of contracts they have, how much money they’re paid? And they said “We’re not going to give you anything.” And I said oh, OK. So then as a reporter that sort of sets off your spidey sense, right? Because you know, like, well, why wouldn’t they give them to me? So I asked for the financial disclosure forms. They wouldn’t give them to me. I checked out the state–at first I thought they were probably filed with the State Ethics Commission, where almost all the other forms are filed, but they weren’t. Eventually after calling around and asking enough people, including people who are very knowledgeable about the medical system and how it works, I was able to track down these forms. They had a–I think it was an intern scanned them in for me, no one had looked at them in a couple of years, and sent them down to me. That happened literally the day before Senator Carter’s bill was supposed to have a hearing. And so I obviously called all the board members who had the contracts as I was going through these disclosure forms, and including Mayor Catherine Pugh, who I think we both were surprised was in was in these documents, and published the story.

And you know, we do a lot of stories at the Sun where we were look at contracting and conflicts of interest, and raise questions about things. But lots of times people just shrug them off, and there’s no big deal. But this one had such an immediate impact. I mean, the next day I think Senate President Miller called it a disaster. And Speaker Busch called it the greatest scandal in the history of the legislature. And Governor Hogan was outraged, and on and on. And then board members started to resign, and more information came out. At first the mayor said she had two or three $100,000 deals.

JAISAL NOOR: First she called it a witch hunt.

LUKE BROADWATER: Yeah, she did call that that. Then it was $500,000. Then it was $600,000, $700,000, $800,000. Then it was not just the University of Maryland Medical System, but also CareFirst, and J.P. Grant, and all these other people. The CEO had to go on leave. The bill got amended to force the entire board off. I mean, it just spiraled so quickly. I mean, people were all–Frank Kelly and all his sons resigned from all the–or took leaves from all the different medical systems boards. Just yesterday one of the guys from the Eastern Shore Hospital stepped down.

So there was just tremendous, widespread impact, and not just from my reporting; from great reporting from other Sun colleagues, from the Brew, from the business journal, from WBAL. And it really was a tremendous–a tremendous fallout. You know, and it all started with a question from a senator.

JAISAL NOOR: So, Senator Carter, your reforms have passed the Assembly. And did you–so talk about, when you first had this idea, how did you get the idea to do these reforms–Luke talked a little bit about it–and did you think we’d be in the position we are today as a result of this getting proposed?

JILL CARTER: No, I had no idea. The fallout has been incredible. I’ve never seen anything like this in my life, much less my political career. We’ve seen the takedown, essentially, of a mayor. And it took about two weeks from the day that the bill hearing happened and the first story came out until the mayor’s resignation. And now all of these calls that have come after that for her to resign. Nothing has ever gone this quickly that I’ve ever seen.

But initially, again, it was about contracting. It was about minority opportunity. I’ve always been concerned about that. Believe it or not, in 2003 when I first ran, that was my number one issue, really, because I was working with minority contractors. Then I got to Annapolis and saw, oh, we need to do something with schools, and lead poisoning, and a lot of bigger issues there, you know, even before you get to contracting.

But I also had heard for years that there was unfairness with UMMS, and that because it was this private–it had been privatized, they were able to get away with a lot. But I had really kind of, like, brushed it off and dealt with other things. But it was always in the back of my mind that was something that needed to be looked into.

But I think that what’s critically important to remember is that even though a lot of the press has gone to the mayor, exactly what we talked about that, that the University of Maryland Medical System only got privatized because the senator lobbied hard for it, and that was Senator Kelly. Frank Kelly when he was a senator. And then after it’s privatized and he steps down, then he is on the board. Members of his family are on other, similar boards. And they’re getting all of these contracts that are, to the best of our knowledge at this point, that aren’t in the procurement process, that aren’t competitively bid.

And so that’s really something that we should think about when we think about privatization, and we also think about the interplay between elected officials and these kinds of entities. Because the Senate president and the speaker of the House both held seats on the board, the UMMS board. The speaker actually held–used his seat. The Senate president sent a surrogate. But I mean, ostensibly we would think that having these public officials, there would be some type of oversight. But we saw that there was no oversight at all. And in fact, the legislation has brought that out and seeks to address those issues. There will–one thing the legislation did, there will be no more elected officials on the board. And then also the legislation calls for them to set up policies for their procurement process and for dealing with conflicts of interest and everything else, and also sets up prohibitions for those that are on the board or that have had prior work, to get preferential treatment. And it also expands to the 11 or so affiliates that are under the University of Maryland board.

JAISAL NOOR: So, Fern, the Brew has been reporting on these types of issues for a long time, in City Hall and beyond. Were you surprised by this? And I want to ask you about some of your reporting on Jim Smith, a Pugh funder and aide who just departed, and other figures were recently put on paid leave. And there’s that lucrative contract with J.P. Grant which the Brew has also reported on. Talk a little bit about that.

FERN SHEN: Yeah. Well, I have kind of mixed feelings about this. In a way, like everybody else, I was surprised. It almost seemed sort of sloppy, and so blatant to have this almost kind of a, you know, it’ll all be proved out one way or the other, but looks like a sort of a shakedown system, and really quite appalling, where these books that–you know, it’s really not complicated to see these don’t seem especially, you know, to have merit on their own. It feels like a sort of a naked thing. But at the same time some of the–you know, we weren’t surprised at all in the sense that some of the characters who turn up in the story are people we’ve reported on who have been sort of part of this kind of cozy relationship between, you know, the private side and legislators and politicians. You know, Jim Smith, we wrote about him. He was on board. He really bailed out the mayor at a key time in the-

JAISAL NOOR: With a $100,000.

FERN SHEN: With a $100,000 loan. And you know, we wrote about this at the time, and it ended up it was, you know, it violated campaign finance laws. And he, you know, had to pay a fine. This was–he was cited for this. But it’s sort of, you know, oh well, pay the fine, let’s go on. And you know, some of the other characters in there like Walter Tilley; we had written about him, and I think you guys had, too, flying the mayor to the shopping center conference on his plane. And also, you know, providing some campaign funds for her. J.P. Grant. You know, you’ve written about it. We wrote about it, you know, quite a bit way back when. A businessman. And he’s another character here who bought the Healthy Hollies. We’ve written about him.

JAISAL NOOR: He got one copy. For over $100,000.

FERN SHEN: I’m sure he enjoyed that one copy.

LUKE BROADWATER: He says it was a $100,000 donation. The only evidence that he got that the money was used for anything was that she sent him one book.

FERN SHEN: Right. Right. So he has, you know, just myriad ties to the political leaders and, you know, huge contracts with the city to provide leased equipment for different city agencies. So he’s very involved. And you know, and it all kind of connected back to some of the other reporting that we’ve done, for instance, on this conduit contract. It’s a little nerdy, but it’s a huge contract. It’s really the biggest infrastructure contract in the city right now. And politically-

JAISAL NOOR: It could be over $100 million.

FERN SHEN: Yeah, it kind of ballooned up. The company behind it really is a previously obscure drywall company, but they are politically connected. And Mr. Grant, our reporting shows–we haven’t heard to the contrary, is, you know, one of their financial backers. And they, the Board of Estimates approved on through this very dramatic expansion of their contract. You know, I could go on. The connections are kind of mind boggling that one company apparently has done some gratis remodeling for the mayor’s house. You know, what–the whole sort of pay-to-play theme that’s exposed by what you have reported and what you’re pointing out in the legislature really is something that’s, you know, a larger problem that–you know, I think that’s one byproduct of this that people are really starting to see that now.

JAISAL NOOR: And I wanted to get into former State Senator Frank Kelly, whose family has done at least $30 million of contracting with the UMMS board since 2010, according to BAL. And you know, we’re talking of millions of dollars. We’re talking about a public entity that was privatized. And the question is was health care privatized–I mean, what the consequences were for the health service. And at the same time these people are all getting multimillion dollar bonuses and salaries.

LUKE BROADWATER: So Frank Kelly is the person who has been most enriched that was on the board. Frank Kelly really is perhaps the most influential person in the growth of the University of Maryland Medical System. He’s the senator behind the privatization effort. He’s a founding board member. And despite a provision of state law that says after every five years you have to step down from the board or your term ends, he has remained on the board up until this scandal broke.

They report to us he’s made $16 million in the past five or six years of the contracts. They have declined to say, both the Kellys and the medical system, whether any contract was ever bid out. We don’t know. We can’t prove that they were or weren’t. But the legislation that has just passed and the governor is expected to sign next week would make it illegal for it to not be bid out. So that is something that will likely have to change.

JAISAL NOOR: And do you think–the reforms that you have helped pass, do they go far enough? Or do you want to see more reforms target this?

JILL CARTER: I think they’re a start. I think that we need to take a look at where this gets us over the next couple of years and see if there needs to be some additional requirements or mandates put in. But I think that even larger than the University of Maryland Medical System, I think it should give us good reason and opportunity and motivation to look at other systems. I think they are not alone. They were different because they were quasi-private, quasi-public. I say that because–you know, privatization is very confusing when you still get public dollars. And that’s exactly what they did. But I think the broader issue beyond just these board members is that, again, when they’re giving contracts themselves, when they’re enriching themselves, it’s depriving the people of Baltimore of opportunities and jobs. It’s depriving minority businesses and people that live in the city of what they need. And it’s really showing the divide between, you know, us versus them. And that’s what this entire thing symbolizes, the type of system that we need to change.

JAISAL NOOR: So I want to go back to City Hall for a bit of this discussion, because you’re all very familiar with City Hall; reported or worked there at various times. This has also exposed the power of the mayor in Baltimore City. Baltimore City is one of the strongest mayors in the country; controls over spending, appointments, and much more. What kind of reforms would you need to sort of pare back some of that power and distribute it more evenly with other politicians, but also the public as well?

JILL CARTER: Well, people have talked about, you know, should the charter be changed so we have a recall provision? Should the balance of power be changed on the Board of Estimates? Because right now the way it’s constructed the mayor dominates that. She has–it’s a five member board.

JAISAL NOOR: That approves all spending.

JILL CARTER: Yeah, yeah. Millions and millions of dollars, tax dollars, are spent with very little oversight. In those meetings they have once a week, the public really doesn’t have a role to pipe up and say anything. A lot gets discussed beforehand. So you know, the mayor really dominates that spending process. So that’s one [crosstalk].

LUKE BROADWATER: Every contract over $50,000 is approved by the Board of Estimates, and contracts below $25,000–$25,000 and above have to be disclosed publicly. But yeah, I mean, look–you have a situation where you have this strong mayor. And if the mayor comes to somebody, let’s say CareFirst, who wants a $48 million contract and says “I want you to buy 100,000 copies of my children’s books,” or she goes to J.P. Grant and says–and he has just millions and millions of work with the city with the master lease, “I want you to make a $100,000 donation to my LLC which does children’s books, it’s good for the kids of Baltimore, don’t you want to give?” That puts–that creates just a very ethically dubious situation. And so is it–is it the case that having the mayor with so much power over every city contract, is that is that the best situation for Baltimore? And I think that’s the kind of questions you’re asking right now.

JILL CARTER: Like should it be a city manager form of government? I mean, there’s all kinds of other ways to do it. Maybe this will open up discussion. And really, the benefit of this is just kind of pull the string and unraveled, you know, a lot of the way things are done around here. So maybe some of these real systemic discussions will happen.

LUKE BROADWATER: I think there’s going to be so much more fallout on this. I think the next year when the legislature meets–and this is just me making a prediction–I bet we’re going to see a real tough look at many of these quasi-private-public boards, places like the BDC, but not just them. They’re all over the state, where you have things that used to be public and have been privatized, and now operate not without the state procurement rules, and not without Public Information Act, and all the things that we expect of the taxpayer-run institutions. And I expect we’ll see a lot of the legislature get a lot tougher with that.

JILL CARTER: I agree. But I think just when we talk about mayoral power we also have to talk about campaign finance. Because in addition to the deals that were done with the board it was also revealed that every board member gave a huge amount of money to the mayor. Even with the Hopkins situation that was revealed by the Brew that the–like a day before session they gave $16,000 to the mayor. This was her number one priority that her office lobbied for in the session this year. So campaign finance plays a big deal, because if you’re not a part of this insider network, if you’re not a part of this group, the chances that you’re going to be able to raise money to compete with this, these large amounts of dollars, is slim to none. And so it forecloses the opportunity for other people to really participate fully in the campaigns and deprives us of a real democratic process.

JAISAL NOOR: And I wanted to turn to that the recent protests at Johns Hopkins against the private police bill that was passed by the Assembly, and is awaiting approval by the governor. So, Senator Carter, you addressed the crowd earlier this week.

JILL CARTER [CLIP]: You all have given me life and hope. JHU and community allies, the work that you’re doing, the protest, the sit-ins, the relentless fight to not allow this law to just take effect, it is exactly what we need. And so I’m Jill Carter, I’m one of the two senators in the entire Maryland Senate that voted against the bill. [Applause] But then that fight we didn’t win. In fact, some of you were watching, and you know that’s because the fix was in.

JAISAL NOOR: So students that are also in the second week of a sit-in to protest this, the university says their position hasn’t changed, they’re going to go ahead and implement this police force starting on January 1. You talked about the at least $16,000 dollars that the board of Hopkins gave as individuals-

JILL CARTER: And that’s small potatoes, I’m sure, in the scheme of how much ultimately contributed over time.

JAISAL NOOR: And so talk about why this is such an important issue for you, because you were one of the two votes against this in the Senate.

JILL CARTER: I think the first thing, the overwhelming, fundamental issue, is that it sets a bad precedent for privatization of law enforcement, which should be a public function. And I’m very concerned that the next group and the next group and the next group will come along and say, hey, we want to pay for our police, too; because we can afford to pay for police, this is what we’re going to do. And I also fundamentally find it disturbing that Hopkins has been–has had issues in Baltimore. Many people have argued, and I think rightly, that this entity that doesn’t pay taxes has also been discriminatory in Baltimore. It’s also engaged in a great deal of the gentrification in East Baltimore, and so many other problems that they’ve never really come to the table with the city and talked about these problems, and how to be a better–a better neighbor, a better participant in the city. But then in this volatile time while we’re under a consent decree about policing they say we have to have this police force, because Baltimore is crime-ridden.

But really one of my big issues is that they didn’t produce any empirical data that this particular model that they’re using is somehow going to be proven to be something that’s going to be effective, or actually worthwhile. But just because Baltimore’s crime-ridden, we’re going to send a message to the entire world that we’re not going to be infected with the cancer that is Baltimore, with all the crime. We want to show you that it’s safe to come here despite the fact that we’re in Baltimore. And I find that highly offensive to the people that live here.

JAISAL NOOR: So it’s the Brew that broke this story about this these campaign contributions, something the students are saying, look, you know, this is part of this bigger–they’re saying this is linked to this bigger corruption scandal in the city, and they’re calling–I mean, the bill is now passed. But they don’t–they do not want to see it implemented, and they’re calling for a referendum.

FERN SHEN: Yeah. When the whole scandal with the mayor came up they sort of made the connection, the light bulb went off. They said this is a disgraced mayor, and this is the same sort of pay-to-play strategy, phenomenon that that was exposed here was something they looked at our story and said wow, this happened with our university president and all these top officials. I mean, we went and looked at the publicly available campaign contributions, and turned down on this one single day, right at the deadline for the mayor, she received contributions from all these–you know, they contributed as individuals. You’re not supposed to do it as a non-profit. But you know, perfectly legal. But it was very coordinated, and this really struck a chord with people.

So yeah they’ve made this connection and said, you know, wow. We’ve got, you know, a sort of a top-down, authoritarian, non-democratic–you know, these are the kids speaking. But you know, this is their language, and they connected it up with City Hall, and said we’ve got this mode and university bureaucracy and it’s kind of similar to what we see in City Hall. And they really are calling for this. It’s one more argument that they’re using to say this police force should not happen, because it was sort of conceived under a, you know, a corrupted process with these contributions.

JAISAL NOOR: Yeah. And Luke, so this was originally proposed last year, and they withdrew it after intense pressure from the community. They came back this year. You followed the bill’s process through both houses. You know, the senator says the fix was in for this bill. What are your observations on this process?

LUKE BROADWATER: Well, yes. I mean, last year they did not–the lobbyists on behalf of Hopkins–and Hopkins had eight lobbyists working on this bill, and even, you know, brought down Mike Bloomberg for it–they did not have leadership on board for the push. And that’s really the big difference. Anybody who knows how the Assembly works, if Mike Miller and Mike Busch say something is going to pass, it’s going to pass. And they will make sure it does.

And so–I mean, right out the gate in my first interview with Mike Miller this session, I sat down with him, I said, “What are your priorities?” And the first thing he said was Hopkins police. I didn’t even know that was going to be back again. So he–obviously he was, like, gearing up for this. And you saw how the Senate fell in line. Even, you know, some people who are otherwise pretty progressive in the Senate ended up voting for the bill, and there was only the two no votes, which was Senator Carter and Senator Washington. You know, people from Montgomery County and Prince George’s County who you otherwise think is very liberal voted for this bill.

In the House. I think there was more of a groundswell against it. There were 42 no votes. You had a lot of freshmen, younger progressive Democrats from Prince George’s and Montgomery, who joined some of the city lawmakers in voting against it. So there was a little bit–I think there was less of a push in the House to make it pass, although there was still a push from leadership. But that was really the difference when you get the two big leaders involved. That’s how you get things passed in Annapolis.

JAISAL NOOR: And the governor has said he’s going to sign it. He’s a big supporter, as well.

LUKE BROADWATER: He’s a big supporter. He thinks you’re crazy if you’re against this. How could you not want more police? You know, that’s the governor’s point of view.

JAISAL NOOR: And finally I want to end with you, Senator Carter. So you know, Hopkins says the city is unsafe, there’s skyrocketing crime. The Baltimore Police Department is understaffed. They don’t have enough officers to keep our campus safe, as well. We’re taking a burden off the–we’re taking the burden off the Baltimore Police Department. And they say this is going to be accountable to the community, it’s going to be accountable to the students and the university. So it’s going to be the most democratic form of police you can have, the most accountable form of policing you could have in this city.

JILL CARTER: So when your premise is wrong your conclusion is wrong. And because of all of the staff and faculty, all of the union workers at Hopkins, all the students, and actually the overwhelming majority of neighborhoods that are adjacent to Hopkins were in opposition to this bill. Thus they–you’ve already shown that they’re not accountable, because if they were accountable they would have taken the community input and they would have devised something that was really the will of the people that live in the neighboring areas, and their own faculty and staff and workers wanted. But they ignored those voices because there was just a push to get this through no matter what, and then sell it to the people.

I’m concerned about it because, well, first of all, it’s also not really exactly what they say. There is no accountability, because all of the members of this board are appointed by Hopkins and accountable to Hopkins. So that’s not real accountability. And then the civilian review board, you know, we’re still in a fight to try to give them the adequate authority that they need. So currently they don’t have enough authority to make Hopkins accountable because they don’t have the authority to make the Baltimore Police Department accountable.

But what’s really interesting is that I think people were misled. This police department, some people actually thought it would be limited to Hopkins, but it can police the adjacent neighborhoods. But it only has three areas that it’s allowed to police. And the misdemeanor, minimal things that are far from the larger crimes that we have. So people are really worried about, you know, robbery, rape, carjacking, murder. Hopkins has no authority under this bill to deal with that. They’re still going to have to just call the Baltimore Police Department like any security guard would have to do. And so that’s a misnomer about that they’re going to actually be real, thorough, comprehensive, robust police. That’s not true.

But there’s there’s no real accountability, basically. And I think that they started wrong, and thus the conclusion is going to be wrong. And they’ve really been tone deaf to the voice of the city, which is a problem that they’re starting out that way.

LUKE BROADWATER: There still is a chance to stop the bill, though. There is a petition drive that is being launched, that they need to get about 70,000 signatures-

JAISAL NOOR: From across the state.

LUKE BROADWATER: In less than two months. But that–if that can be done, it could be put on the ballot for the next election. It would freeze the bill and not allow Hopkins police to become law. And it would go to the voters in 2020.

JILL CARTER: Which–that will be a heavy lift. But the students seem revved up, and so did the people in the community. So I guess it’s not impossible. I’d like to see that happen. And then there’s also the opportunity to negotiate a deal with the MOU, and make sure that we put some things in place with that.

JAISAL NOOR: All right. Well, I want to thank you all for joining us. Senator Jill Carter, Luke Broadwater, politics reporter for the Sun, and Fern Shen, publisher and editor of the Baltimore brew. Thank you all for joining us.

JAISAL NOOR: Thank you for joining us at The Real News Network.