Judge postpones detention ruling for Omaha Councilman Palermo, retired OPD captain

LINCOLN, Neb. (WOWT) - A judge ruled Wednesday that Omaha City Councilman Vinny Palermo and two others facing federal charges will remain in custody until the evidence presented during Wednesday’s hearing can be properly reviewed.

Magistrate Judge Cheryl Zwart said that she would make her detention ruling on Friday, deciding whether to hold Councilman Palermo, 49; retired Omaha Police Capt. Richard “Richie” Gonzalez, 55; and Jack Olson, 66, chief fundraiser for the Omaha chapter of the Latino Peace Officers Association also known as “Cody Jones,” until trial — which she did Monday when retired Omaha Police Detective Johnny Palermo, 47, entered his “not guilty” plea.

The four men were arrested Friday, April 21, after two federal indictments were unsealed alleging 41 charges relating to wire fraud and various financial schemes, public corruption, and even obstruction of justice. They have all pled “not guilty.”

The detention decision set for the end of this week will impact whether Palermo, who faces nine felony charges of wire and bank fraud, will be able to remain on the Omaha City Council or be kicked off due to extended absences while he’s in jail. Meanwhile, a recall petition process has already begun, and the Omaha City Council voted Tuesday to remove Palermo from his position as vice president after stripping of his committee assignments.

Several hours into their initial detention hearing Wednesday, the judge ruled the councilman, Gonzalez, and Olson will remain locked up until she is able to read through the volumes of evidence.

“This isn’t one of those cases where I’m going to quickly rule ‘yay’ or ‘nay.’ It will take a bit,” the judge said Wednesday afternoon.

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Prosecutors told 6 News last week that they plan to ask that the councilman remain in jail.

The government argued that both Vinny Palermo and Rich Gonzalez used burner phones to communicate; were tipped off to the investigation by someone on the inside; and started to meet more in public spaces so their phone conversations wouldn’t be recorded.

Investigators also alleged Palermo obstructed justice by coaching witnesses what to say to the grand jury.

His team is optimistic that the judge will rule in their favor.

“The bulk of evidence that was put out for detention today dealt with the other defendants. I think I delineated my client from the three,” said Randy Paragas, the councilman’s attorney. “His alleged crimes are paper crimes that have to do with filing applications or disclosures or wrong filings. It doesn’t have to do with rapes or police coverup or drunk driving. It doesn’t have to do with any of that. That’s why I think he is not a risk to obstructing justice.”

The judge did make a note of allegations that Palermo violated his probation from when he was sentenced for not filing tax returns from a decade ago. That could result in a year in prison.

Gonzalez’s attorney asked the court to consider house arrest for his client — with 24/7 monitoring.

Palermo and Gonzalez appeared in court Wednesday wearing orange jumpsuits — a contrast to the business suits they wore to Monday’s hearing. Olson, however, was in court Wednesday in street clothes, including a Seattle Seahawks shirt.

All three were returned to Saunders County Jail in Wahoo after Wednesday’s hearing.

From 9 a.m. to noon on Wednesday, attorney Steve Lefler, who represents Gonzalez, grilled Omaha FBI Special Agent Michele Stevenson about whether any of the evidence in this public corruption indictment should give the judge pause to question the trustworthiness of his client — or whether she suspects he would try to influence witnesses if he were released before trial.

That’s important because, on Monday, Detective Palermo was told by the judge that based on the evidence, she was keeping him in jail because she didn’t trust him not to interfere with the investigation; so he will remain in jail until trial.

“I think everyone here now has a different idea of the case at the end of today than when the charges came out,” Lefler said. “I think most Omahans thought, ‘Those people are guilty. They’re dirty. They are this.’ But after listening to this today, they might say, ‘The government is stretching on this.’”

Earlier on Wednesday, the judge seemed frustrated that the hearing would likely eat into most of the day, indicating that she may not be able to make any decisions about detention yet.

During the three hours of testimony Wednesday morning, things got a bit testy a few times between Lefler and the judge. The judge told the attorney that she didn’t care about past investigations that may or may not have involved Gonzalez — that she’s not there to characterize whether people are dirty cops or not, or whether they’re a good or bad person.

She later interrupted Lefler saying: “If it’s common sense, you can assume I have it.”

The judge went on to say that she’s zeroing in on the wiretaps in determining whether to keep the defendants in custody or not, saying: “Nobody can contradict that stuff.”

Lefler tried to paint a picture that Gonzalez is a decorated police officer who hasn’t tried to influence any witnesses, taking it a step further noting that he has also proposed a third-party watch system if he’s released for trial.

His idea: having his wife make sure Gonzalez follows the rules of the court while at home. They would install cameras and microphones so the government could watch, too; it could even involve an ankle monitor. and on weekends, when Mrs. Gonzalez works overnights as a nurse, other family members such as his mother and sister and daughter would keep him on the straight and narrow.

Initial hearings started on Monday, but after a lengthy PowerPoint hearing on the charges against retired Detective Palermo, the judge combined the initial hearings for the remaining three defendants in order to expedite the process. Their attorneys then requested additional time to prepare as to why their clients should not be forced to remain in custody ahead of a trial likely months away.

Following the arrests last week, attorneys said that their clients are not flight risks, noting that none of them had fled following the FBI raids in December.

Councilman Palermo’s case could be further complicated by the fact that he is currently on probation — through the end of this year — for failing to three years’ worth of tax returns.

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Correction: A previous version of this story incorrectly stated that the judge had ruled on the detention status of Councilman Vinny Palermo on Wednesday. 6 News regrets the error.

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