Federal indictments in Omaha: Mayor calls on councilman to resign, OPD chief ‘not shocked’

OMAHA, Neb. (WOWT) - Reactions from Omaha city officials ranged from “not shocked” to concern over the fallout of federal indictments resulting in the arrest of four people, including the vice president of the Omaha City Council.

Unsealing two indictments, the U.S. Attorney’s Office on Friday revealed that Palermo, 49; former Omaha Police Officer Johnny Palermo, 47; former OPD Captain and past PACE Executive Director Richard “Richie” Gonzalez, 55; and Jack Olson, 66, of Council Bluffs, Iowa, who was also known as “Cody Jones,” had all been arrested that morning after the federal grand jury returned indictments this week.

OMAHA MAYOR

Omaha Mayor Jean Stothert acknowledged in a written statement Friday that the indictments raise questions about Vinny Palermo’s votes during his tenure on the council — and she called on the councilman to resign.

“We are concerned about potential conflicts of interest with votes cast by Councilman Palermo during the six years he has served on the Council,” the mayor said in her statement. “As the federal investigation continues, a review of his voting record may be necessary.”

In December, the City of Omaha suspended all its funding to PACE. Omaha Mayor Jean Stothert said in a statement Friday that she plans to follow up with the organization’s leadership to find a path forward.

“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,” the mayor’s statement says. “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.”

FULL STATEMENT

“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 CITY ATTORNEY

Omaha City Attorney Matt Kuhse said Friday that Councilman Palermo’s indictment doesn’t affect his ability to remain on the City Council.

It’s an entirely different matter, however, if he’s convicted.

“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,” Kuhse said in a written statement, “At this time, Councilman Palermo is charged with violations of federal law, not convicted.”

Palermo has been on the City Council since 2017 and was elected as council vice president. He also pleaded guilty in 2019 to not filing tax returns.

FULL STATEMENT

“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.”

OMAHA POLICE CHIEF

“I am appalled, but unfortunately not shocked at the content of the federal indictments,” Omaha Police Chief Todd Schmaderer said in a written statement Friday, noting that the investigation could lead to more arrests.

FULL STATEMENT

“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 CITY COUNCIL

Omaha City Council President Pete Festersen said it was “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.

FULL STATEMENT

“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.”

LPOA OMAHA PRESIDENT

Ten days before FBI Omaha raided the homes of both Palermos as well as PACE Omaha offices, there had been a mass exodus of LPOA Omaha members. The City of Omaha Finance Department verified to 6 News at that time that more than 100 police officers had started withholding dues from their paychecks, earmarked for the LPOA, in early December.

The second indictment, which does not name Vinny Palermo, lists 15 counts including fraud, false statements, and scheming to defraud financial institutions as well as the National Latino Peace Officers Association Omaha chapter, known as LPOA Omaha. That organization started the Police Athletics for Community Engagement, known as PACE Omaha, in 2005.

The two organizations are both referenced throughout the indictments but are not targeted.

“The actions of this group have taken away from the great work done by our members who have been longtime coaches and volunteers for both PACE and the old LPOA,” said Queño Martinez, president of the NLPOA Omaha chapter. “The NLPOA worked with national leadership and launched a completely new local organization. ... We know there is a need to build trust back within our membership and in our community.”

FULL STATEMENT

“The National Latino Peace Officers Association Omaha Chapter is aware of the federal indictments and related arrests made today. We as an organization stand by the investigation into the old LPOA organization and await the conclusion of that investigation. We are disheartened to learn about the details of the indictments because of the hurt it has caused the community, our members, and the PACE organization. The actions of this group have taken away from the great work done by our members who have been longtime coaches and volunteers for both PACE and the old LPOA.

The NLPOA worked with national leadership and launched a completely new local organization. We stand by our mission and goals of advocacy for our members, for professional career development opportunities, for networking and community engagement. We know there is a need to build trust back within our membership and in our community. We recently had a successful Easter event with Completely Kids. We look forward to continuing to grow our membership and the services we can provide to officers and our community.”

PREVIOUS PACE STATEMENT

PACE officials said in January that they had been cooperating with the investigation. Lance Jones, chairman of the board of directors for PACE, said in a letter made widely public at the time that the organization was placed in “a very unfortunate situation because of an unrelated association with an ongoing investigation into alleged activities that occurred outside of the PACE organization,” which connects Omaha Police officers with families through sports.

“PACE has fully cooperated with authorities since the beginning of their investigation, and will continue to do so going forward,” the letter states.

Last year, PACE served 5,143 kids, according to its website.

FULL STATEMENT

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RELATED COVERAGE

Omaha Councilman, retired officers arrested on federal charges

Councilman Vinny Palermo, two former Omaha Police officers, and a local fundraiser were arrested Friday after two federal indictments were unsealed alleging wire fraud and various financial schemes.

LPOA Omaha members stop paying dues after FBI searches

More than 140 police officers began withholding funds from the organization that started PACE as an investigation was underway.

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Managing Editor Kevin Westhues contributed to this story.

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