OMAHA, Neb. (KMTV) — In a news release, United States Attorney Steven Russell announced the unsealing of two related indictments containing multiple charges in a case involving funds belonging to Latino Peace Officers’ Association (LPOA) and Police Athletics for Community Engagement (PACE).
Omaha City Councilmember Vinny Palermo, two retired Omaha Police officers, Johnny Palermo and Rich Gonzalez, and a Council Bluffs man, Jack Olson, were indicted and arrested on related charges, according to the U.S. Attorney.
In December, the FBI confirmed that it served federal search warrants at the homes of Vinny Palermo and Johnny Palermo.
KMTV 3 News Now only publishes mugshots in certain situations. It’s part of our commitment to being fair and minimizing harm in our reporting. In this case, we are using mugshots because the suspects are high-profile people who have held positions of trust in the community and because the charges are serious. To read more about our mugshot policy, click here.
Here's what we know from the U.S. Attorney's news release:
"The indictments were unsealed after this morning’s arrests of Omaha City Councilman Vincent J. Palermo, 49, Former Omaha Police Officer Johnny Palermo, 47, Former Omaha Police Captain and Former PACE Executive Director Richard Gonzalez, 55, and Jack Olson, 66, of Council Bluffs, Iowa. The indictments were returned by the Grand Jury this week in Omaha, Nebraska. The indictments are comprised of multiple counts. Each count is merely an accusation, and all defendants are presumed innocent unless and until proven guilty."
The first indictment
Johnny Palermo, Gonzalez, and Olson are charged with defrauding donors of the Latino Peace Officers’ Association (“LPOA”), and the LPOA board.
Johnny Palermo and Gonzalez are further charged with defrauding LPOA and Police Athletics for Community Engagement (“PACE”) for their own personal benefit.
Johnny Palermo is separately charged with wire fraud through an alleged false application to obtain a “Paycheck Protection Program” or PPP loan through his purported real estate company, Palermo Investments, LLC. Johnny Palermo is also charged with making false statements to the Small Business Administration in an attempt to get an Economic Injury and Disaster or EIDL loan.
Johnny Palermo is further charged with defrauding the citizens of Nebraska and the Omaha Police Department of his honest services as a police officer by accepting a stream of financial benefits from Gonzalez and Olson that influenced Johnny Palermo to interfere with an ongoing sexual assault investigation for which Olson is the lead suspect.
The second indictment:
Johnny Palermo and Gonzalez are charged with conspiring with Omaha City Councilman Vincent J. Palermo to deprive the citizens of Nebraska of Councilman Palermo’s honest services through paid travel benefits, including a luxury hotel suite, a trip to Las Vegas, and other destinations, among other items of value in exchange for Vincent J. Palermo’s official acts done for the benefit of LPOA and PACE.
Johnny Palermo was the President of LPOA and Gonzalez was the Executive Director of PACE and a member of LPOA. Councilman Palermo awarded money to both non-profits and failed to disclose the private benefits that he was receiving while taking official acts for the benefit of LPOA and PACE.
Vincent J. Palermo is further charged with failing to disclose personal benefits, including income, gifts, and other items of value that he received from Omaha Glass Pro, a company that he voted to award city contracts to during the charged timeframes, along with failing to disclose discounted concrete work to his backyard pool that was poured by a concrete contractor that also had contracts with the City of Omaha.
Finally, Vincent J. Palermo is alleged to have concealed his status on federal probation when he applied for a PPP loan for approximately $68,000 that was later forgiven, which money went to the benefit of his sole proprietorship, Vinny’s Tree Service, and for his personal benefit.
Johnny Palermo faces 15 charges in both indictments. The charges include conspiracy to commit wire fraud and conspiracy to commit honest services fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, each in violation of Title 18, United States Code, Section 1349; wire fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1343; honest services fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1346; and making false statements on loan applications, punishable by up to 30 years’ imprisonment, a $1,000,000 fine, and five years of supervised release, in violation of Title 18, United States Code, Section 1014.
Jack Olson is alleged to have solicited funds for LPOA using the false identity of “Cody Jones.” Olson is charged with a total of four violations of federal law, including aiding and abetting Officer Johnny Palermo’s honest services fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Sections 1346, 1343, and 2; conspiracy to defraud LPOA donors and the LPOA, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1349; and wire fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, each in violation of Title 18, United States Code, Section 1343.
Rich Gonzalez faces a total of 13 charges in both indictments. The charges include conspiracy to commit wire fraud and conspiracy to commit honest services fraud, both punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, each in violation of Title 18, United States Code, Section 1349; wire fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1343; aiding and abetting the honest services fraud of Officer Johnny Palermo, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Sections 1346, 1343, and 2; and making false statements on loan applications, punishable by up to 30 years’ imprisonment, a $1,000,000 fine, and five years of supervised release, in violation of Title 18, United States Code, Section 1014.
Councilman Vinny Palermo is charged with nine separate violations of federal law, to include conspiracy to commit honest services fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1349; honest services fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Sections 1846 and 1843; wire fraud, punishable by up to 20 years’ imprisonment, a $250,000 fine, and three years of supervised release, in violation of Title 18, United States Code, Section 1343, and bank fraud, punishable by up to 30 years’ imprisonment, a $1,000,000 fine, and five years, in violation of Title 18, United States Code, Section 1344.
United States Attorney Russell noted that the indictments and Friday’s arrests send an important message to those who breach the public’s trust. He added, “I appreciate the tremendous work of the Omaha Division of the Federal Bureau of Investigation and other law enforcement on this important case.”
After the arrests, FBI Omaha Special Agent in Charge Eugene Kowel said, “Public corruption is a top criminal priority for the FBI. Special Agents from the FBI Omaha field office, with the cooperation of our federal, state and local law enforcement partners, worked hundreds of hours on the investigation that led to today’s arrests. We especially appreciate our partnership with the Omaha Police Department in this case. Corruption tears at the foundation of our democracy. No level of corruption should be tolerated or accepted.”
Each of the defendants will make their initial appearance on Monday at 1 p.m. in Lincoln, Nebraska.
This case was investigated by the Federal Bureau of Investigation.
Statements from Omaha officials
Omaha Police Chief Todd Schmaderer:
"I am appalled, but unfortunately not shocked at the content of the federal indictments. As the federal investigation continues, there is a possibility that more arrests will be made. The federal indictments speak for themselves. I want to thank the Federal Bureau of Investigation and the United States Attorney’s Office for their diligent and thorough work."
Omaha Mayor Jean Stothert on indictment:
"A preliminary review of the Grand Jury indictment which was unsealed this morning is tremendously concerning.
Councilman Palermo should immediately resign from the Omaha City Council. He has violated the trust of the citizens he was elected to represent and damaged public confidence in the City Council.
A council member under federal indictment for numerous complaints relating to criminal conspiracy, fraud, and public corruption cannot be entrusted with spending taxpayer money, making decisions that impact public safety and the many other responsibilities that come with public office.
We are concerned about potential conflicts of interest with votes cast by Councilman Palermo during the six years he has served on the Council. As the federal investigation continues, a review of his voting record may be necessary.
The two former Omaha Police officers indicted today do not represent the professionalism and integrity of the Omaha Police Department. The alleged actions by these former officers, which were performed outside of their duties with the Omaha Police Department, do not represent the high standards of the Omaha Police Department and will not impact our commitment to public safety. Chief Schmaderer has made personnel decisions to protect the department. The Chief is committed to transparency and accountability. He has earned the public’s trust."
Omaha Mayor Jean Stothert on PACE:
"In December, after learning that PACE was involved in a federal investigation, I withheld funding to PACE. These are taxpayer dollars and we must do all we can to ensure they are used appropriately. While these indictments are a clear sign that PACE, as an organization, was taken advantage of, there are still questions that need to be answered before I am comfortable releasing the funds. In the coming weeks, I intend to meet with the PACE Board and leadership to determine the best plan to continue the city’s cooperation with PACE." - Mayor Jean Stothert
Omaha City Council President Pete Festersen issued the following statement on the indictment:
"I have been advised by the City Attorney's Office that an indictment was unsealed this morning that includes charges against Councilmember Palermo. This is a matter of great concern that we will be reviewing closely. I can assure citizens that the City Council will continue to serve them and conduct the city's business as Councilmember Palermo avails himself of due process in the matter."
The Mayor's Office issued a statement from the City's Attorney regarding how the indictment could affect Palermo's ability to be a councilmember:
"The federal grand jury's decision to indict Councilman Palermo does not affect his ability to remain on the City Council.
The City of Omaha Charter (Sec. 2.05) only automatically forfeits a council member's position if he or she is convicted of a felony or any crime involving a violation of the City of Omaha's oath of office. At this time, Councilman Palermo is charged with violations of federal law, not convicted.
However, the same provision of the Charter requires forfeiture of office if City Council meetings are missed. While the length of Councilman Palermo's incarceration is unknown, he faces removal from office if he is absent from Council meetings for three consecutive calendar months without being excused by the Council. Also, regardless of whether he is excused or not, he would automatically be removed after missing six consecutive calendar months of meetings.
It is the opinion of the Law Department that missing a meeting due to pretrial incarceration on a federal indictment is not an excusable absence.
If Councilman Palermo resigns or forfeits his office, the remaining council members will vote on his replacement. That replacement would require a majority vote and a tie vote is a vote to deny the nominee. Nebraska law requires the City of Omaha to have a seven-member Council and therefore, the Council must replace Councilman Palermo if he resigns or forfeits his seat."
See the full indictments below:
(WARNING: Documents contain vulgar language and references to sexual assault)
LINK TO INDICTMENT OF VINNY PALERMO, JOHNNY PALERMO, AND RICHIE GONZALEZ
LINK TO INDICTMENT OF JOHNNY PALERMO, RICHIE GONZALEZ, JACK OLSON
Download our apps today for all of our latest coverage.
Get the latest news and weather delivered straight to your inbox.
