An Omaha city councilman, two former Omaha police officers and a fourth man have been indicted in a federal investigation into the misuse of funds from a youth sports program and a Latino officers' group.

Former Capt. Richard Gonzalez, former officer Johnny Palermo and fundraiser Jack Olson were indicted on wire fraud and other charges related to the Police Athletics for Community Engagement, or PACE, youth sports program, and the Latino Peace Officers Association, federal prosecutors announced Friday. Councilman Vinny Palermo was charged with fraud conspiracy in a separate indictment.

The indictments make sweeping allegations stretching over years of stealing money donated to the Latino officers group and PACE and spending it on travel, gambling and prostitution.

"Corruption tears at the foundation of our democracy," the FBI Omaha special agent in charge, Eugene Kowel, said in a statement. "No level of corruption should be tolerated or accepted."

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All four were arrested Friday and are set to appear in federal court in Lincoln on Monday.

Johnny Palermo was the Latino officers group president when the FBI served search warrants in December. He retired after he was put on leave because of this investigation. Olson was a fundraiser for the group. The two Palermos are not related.

Vinny Palermo’s attorney, W. Randall Paragas, said he would not comment until after the councilman appears in court.

"We’ll let the facts come out and see where all this ends," said Glenn Shapiro, an attorney for Johnny Palermo.

Steve Lefler, an attorney for Gonzalez, said he was confident that "once all of the information comes forward this investigation will be shown to be politically motivated effort to embarrass the Gonzalez family."

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Olson's federal public defender did not respond to requests for comment from WOWT-TV.

Police Chief Todd Schmaderer said in a statement that he was "appalled, but unfortunately not shocked at the content of the federal indictments."

Mayor Jean Stothert called on Councilman Palermo 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 a statement. "As the federal investigation continues, a review of his voting record may be necessary."

The city suspended funding to PACE in December after learning of the federal investigation.

"These are taxpayer dollars and we must do all we can to ensure they are used appropriately," the mayor said. "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."

Several of the offenses carry sentences of 20 years or more in prison and fines of up to $250,000.