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Omaha Councilman Arrested Today; Grand Jury Indicts, Mayor Responds

UNITED STATES ATTORNEY STEVEN A. RUSSELL

DISTRICT OF NEBRASKA

Four Men Indicted in Public Corruption Cases

April 21, 2023

                                                            

United States Attorney Steven Russell announced the unsealing of two related indictments. 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.

In the first indictment (4:23CR3051), 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. 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. 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. 

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 Palermo to interfere with an ongoing sexual assault investigation for which Olson is the lead suspect. 

In the second indictment (4:23CR3052), 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, to include 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.

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 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 today’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.

###

Mayor Stothert just released the following statements about the indictments and the city's association with PACE:

INDICTMENTS:

"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." - Mayor Jean Stothert

 

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

This just released by Omaha's Police Chief:

"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 Police Chief Todd Schmaderer


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