Baltimore Should Terminate Master Lease With Grant Capital, New OIG Report Says
Baltimore’s chief solicitor will recommend the city sever a lucrative contract with a company whose founder, J.P. Grant, illegally funneled $170,000 to disgraced former mayor Catherine Pugh.
The recommendation comes after an investigation by the city Inspector General found that Grant’s firm, Grant Capital Management, violated campaign finance law and should not have been considered for the contract.
In a report published Tuesday, Inspector General Isabel Mercedes Cumming
said that GCM should not have been considered for its 2018 master lease renewal because the company submitted an affidavit that falsely claimed Grant had not made any campaign donations to city officials and failed to file required campaign finance disclosure forms in the company’s bid.
Given the businessman’s position as a city contractor subject to the Board of Estimates’ oversight, the businessman’s checks to Pugh “appear to have been made with the intent to buy political influence and/or in direct exchange for political influence,” Cumming wrote. The city spending board is largely controlled by the mayor.
“In the midst of 2020, there have been a lot of challenges and the inspector general's report is just one of those challenges that we're confronted with,” said City Solicitor Dana P. Moore.
She said she will prepare an official memo recommending the city terminate its contract with GCM for as early as next Wednesday’s Board of Estimates meeting.
Baltimore law requires that the top lawyer, upon receiving information that could suggest any impropriety in the bid process, bring that information to the city spending board.
GCM has held a master lease agreement with the city since 2003. The company provides Baltimore money upfront to put toward projects; the city then pays it back over time with interest. Since late last year, GRM has fronted Baltimore about $135 million through the agreement.
Grant’s checks to Pugh were just one facet of the Healthy Holly scandal, in which the politician sold self-published children’s books during her tenure as a state senator and then as mayor to businesses and individuals that held or were seeking contracts with Maryland and Baltimore.
According to federal prosecutors, Grant illegally funneled $170,000 to Pugh through Healthy Holly, LLC and 2 Chic Boutique, LLC, knowing that the Democrat would use some of the payments to buy a second home and make straw donations to her 2016 mayoral campaign instead of distributing children’s books.
Pugh is serving a three-year prison sentence for the scheme. Grant has not been charged with a crime.
According to the report, Grant declined to answer OIG questions regarding his checks to Pugh due to “ongoing legal issues.” But the Columbia-based businessman was firm that his financial dealings with Pugh were not meant “to influence an outcome related to business that Grant or GCM had, or desired to have, with the city,” the report said.
The investigation kicked off in December of last year at the request of City Council President Brandon Scott.
“When we put a spotlight on something or we were asked to investigate something, my office takes it seriously,” Inspector General Cumming said. “I think this is going to be a very good step for Baltimore City and to bring more transparency and accountability into the contracts that our tax dollars are going towards.”
In a letter included in the OIG report, Moore said that Mayor Jack Young and Council President Scott believe that Grant’s actions may call into question the integrity of the city’s bidding process.
“It’s a master lease agreement that has a large price tag on it,” Moore said. “We just want to make sure that we're doing what we're supposed to do as fiscally responsible as possible.”
Moore will also ask the city spending board to decide whether to ban Grant Capital Management and its executive leadership from doing business with the city.