Former Strong City Baltimore leader pleads guilty to federal bank theft charge

The former leader of a troubled Baltimore nonprofit pleaded guilty to a misdemeanor bank theft charge stemming from coronavirus relief funds that prosecutors said the organization obtained under false pretenses.

The plea deal reached Friday means that federal prosecutors will not try Reginald Davis, 42, on harsher wire fraud and money laundering charges lodged against the former Strong City Baltimore executive in 2023. He was scheduled to go on trial in mid-July.

Davis, who took over Strong City in 2020, used the funds to pay off the struggling nonprofit’s prior debts, he admitted in a plea agreement filed in court last week. His defense attorney, Gerald Ruter, did not immediately return a request for comment.

An indictment stated that before Davis came on board, the nonprofit, which managed money for smaller nonprofits in exchange for a portion of their revenue, had been mismanaging its clients’ finances. At one point in 2019, Strong City owed one of the nonprofits more than $600,000, and it only had about 30% of that amount in its bank account.

When he became the nonprofit’s interim CEO, Davis signed off on Paycheck Protection Program paperwork and eventually received approximately $1.4 million, according to the original indictment against Davis.

The nonprofit used that money to pay a bank fee, close out an agreement with a client and pay one of the nonprofits whose finances it managed, according to the indictment. Federal prosecutors said that recipients of PPP loans, enabled by the CARES Act pandemic relief package, aren’t allowed to use the funds for such purposes.

A shorter indictment was filed against Davis on Friday, alongside his guilty plea, stating that he certified the PPP loan would be used “for permissible expenses” but actually intended to use it “impermissibly to pay off Strong City’s preexisting debts to other non-profits.”

U.S. Magistrate Judge Erin Aslan set Davis to be sentenced in late September. His misdemeanor conviction only carries a maximum sentence of one year in prison, and sentences in federal cases rarely reach the maximum.

Davis’s leadership of the nonprofit came amid the organization’s slow unraveling, which culminated in a series of lawsuits from other nonprofits alleging financial mismanagement under the decades-old group’s previous leadership. Strong City failed to file its tax paperwork, prompting the IRS to revoke its status as a nonprofit and Maryland officials to place the organization into forfeiture.

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