Former USA Gymnastics president arrested on charge of evidence tampering in Larry Nassar case

Penny charged with tampering with Nassar evidence

By CNN'S TINA BURNSIDE, ERIC LEVENSON, JILLIAN MARTIN, JEAN CASAREZ, DAVE ALSUP, HOLLY YAN AND RALPH ELLIS CONTRIBUTED TO THIS REPORT.
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(CNN) - The former head of USA Gymnastics was arrested in connection with accusations he removed documents linked to the Larry Nassar sexual abuse case from the Karolyi Ranch gymnastics training facility in Texas, authorities said.

Steve Penny was arrested Wednesday, three weeks after he was indicted by a grand jury for tampering with evidence, the Walker County District Attorney's office said.

He was detained after US Marshals tracked him to a cabin in Gatlinburg, Tennessee. He is being held at the Sevier County Jail while awaiting extradition to Walker County, Texas.

A judge in Texas set his bail at $25,000. He has a court appearance there scheduled for October 29.

The indictment claims Penny ordered the removal of documents from the Karolyi Ranch in Walker County, Texas with "the purpose of impairing the ongoing investigation by destroying or hiding the documents," after he learned an investigation was underway, the Walker County District Attorney's office said.

Authorities claim the documents were later delivered to Penny at the USAG headquarters in Indianapolis, Indiana. The records are currently missing.

The documents would have helped law enforcement investigate Nassar and would have "assisted with the investigation of other offenses that may have occurred at the Karolyi Ranch," the district attorney's office said in a statement.

According to emails obtained by The New York Times, it appears that Penny also sought help from the FBI to protect the image of USA Gymnastics from negative publicity as the sex abuse scandal unfolded. He also told an FBI agent about a top security job with the US Olympic Committee, the newspaper reported.

CNN has not independently verified the contents of the emails.

When asked about the emails, Penny's attorney Edith Matthai told the newspaper that Penny made the request for help to counter claims that USAG had not reported athletes' allegations to the FBI.

Further, Matthai told CNN that Penny "had no authority to offer anyone a position with the USOC."

"Mr. Penny told (the agent) that the security position would open when the current head retired, and that (the agent), who he understood was retiring from the FBI, might be good for the position," Matthai said. "The position did not open up until well over a year later.

"This was normal ordinary networking. Any suggestion that Mr. Penny was attempting to influence the FBI investigation is false and defamatory."

The FBI declined to comment for the newspaper's article.

CNN is currently seeking comment from the FBI and USAG.

'This is for every little girl'

Matthai, Penny's attorney, said Penny was arrested while on vacation with his family in Tennessee and had no knowledge that there had been an indictment in Texas.

"If Mr. Penny had any idea he was sought in Texas this would have been appropriately handled through counsel without terrifying his family," Matthai said. She added that he is confident the facts will show he did nothing criminal.

In a statement, USA Gymnastics said Penny resigned from his role in March 2017.

"We support law enforcement's efforts and have fully cooperated with the investigations by the Texas Rangers, Congress and others, and will continue do so to help the survivors and our community heal from this tragedy," the organization said.

But three-time gold medalist Aly Raisman called out the US Olympic Committee and USA Gymnastics on Twitter, and highlighted past praise they'd offered to Penny.

"USAG, you treat your athletes who speak out as adversaries, but you have the nerve to state you continue to support athletes? Just because you say you support athletes in a press release or on twitter doesn't mean anything..." she wrote.

Rachael Denhollander, the first woman to accuse Nassar of abuse, praised the arrest on Facebook.

"This is for every little girl who could have been saved from Larry, and from every coach that Penny received warnings about, and then put into a file cabinet. They are worth it all. May justice continue to be done," she wrote.

If convicted of the third-degree felony charge, Penny could face up to 10 years in prison and up to a $10,000 fine.

Texas officials investigate Nassar case

Nassar was already serving 40 to 175 years in Michigan for sexually abusing women and girls under the guise of performing medical treatment when he was indicted in June on charges linked to allegations at the Karolyi Ranch.

Nassar is facing six counts of sexual assault of a child and former USA Gymnastics trainer Deborah Van Horn is facing one count of sexual assault of a child in Texas, prosecutors said.

The indictment followed an investigation by the Texas Rangers into possible misconduct at the ranch after victims' attorneys said Nassar abused many women and girls at the training center for years.

The Karolyi Ranch, a 2,000-acre compound about 70 miles north of Houston, is run by longtime gymnastics coaches Martha and Bela Karolyi. It became the US Women's National Team Training Center in 2001 and a US Olympic Training Site in 2011 -- during many of the same years Nassar was the national team doctor.

USA Gymnastics agreed to buy the Karolyi Ranch in 2016 after leasing the center for years but decided not to proceed with the purchase, citing a number of reasons including "unexpected financial expenditures." Earlier this year, the organization cut ties with the facility after several gymnasts, including Simone Biles -- one of the sport's most accomplished stars -- said they were abused by Nassar at the center.

Gov. Greg Abbott requested the investigation earlier this year saying the "recent, shocking allegations of sexual assault of athletes at the Karolyi Ranch in Walker County are deeply disturbing."

Some of Nassar's victims called on Texas officials to investigate what Martha Karolyi knew about Nassar's abuse at her training facility, but authorities cleared the Karolyis from any criminal wrongdoing in June.

"We do not believe there is any corroborative evidence with regard to Martha or Bela Karolyi that they did anything wrong," Walker County Assistant District Attorney Stephanie Stroud said at the time.

Stroud said the Karolyis were interviewed at length by investigators and they continue to cooperate with authorities.

After Nassar's indictment in June, prosecutors said the investigation is now focusing on USA Gymnastics.

The fallout from Nassar's case continues

Penny resigned from the top post at USA Gymnastics last year as the organization became embroiled in the Nassar sexual assault scandal. He had been USA Gymnastics president and chief executive officer for 12 years.

He has since declined to answer questions about the matter. In June, Penny invoked the Fifth Amendment when he appeared at a Senate hearing on the scandal.

He repeatedly refused to answer questions about Nassar and answered just one question to confirm his employment dates.

His attorney, Robert Bittman, released a statement after the hearing saying Perry devoted his career to promoting a safe environment for athletes.

"He is repulsed by Larry Nassar's crimes, and he feels nothing but compassion for the victims of those crimes. Today, on the advice of his attorney, Mr. Penny declined to testify before the subcommittee while the matters that attempt to wrongly shift blame for Nassar's crimes remain open," Bittman wrote.

USAG is struggling to recover from the scandal as several high-ranking officials have left the organization.

Penny's replacement, Kerry Perry, quit after just nine months on the job. She had been criticized for what many considered to be inadequate action during the Nassar abuse fallout.

Perry was replaced by former US Rep. Mary Bono who resigned less than a week after taking over.

Meanwhile, in August, after only three days on the job, elite development coordinator Mary Lee Tracy was asked to resign after she "inappropriately contacted a [Nassar] survivor, who is also a represented plaintiff, in response to that survivor's public criticism of her," USAG said.

And in May, USAG said the head of its women's program, Rhonda Faehn, was no longer with the organization. Then-CEO Perry would not say whether Faehn was fired or resigned, calling Faehn's departure a "personnel matter that we will not discuss in detail."

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