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Former USA Gymnastics head Steve Penny arrested on tampering charges in abuse probe

Penny, who resigned last year, was indicted last month on felony charges of tampering with evidence.
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Steve Penny, who resigned last year as president and chief executive of USA Gymnastics, was arrested by a fugitive task force in Tennessee on Wednesday night, almost three weeks after he was secretly indicted on felony charges of tampering with evidence in the Larry Nassar molestation scandal, authorities said.

Penny was arrested in Gatlinburg, Tennessee, the U.S. Marshals Service said in a statement that revealed that he was indicted Sept. 28 by a grand jury in Walker County, Texas.

According to a summary of the indictment released by Walker County prosecutors, Penny ordered the removal of documents from the Karolyi Ranch, where powerhouse Olympic teams were built and where some athletes say they were molested by Nassar, the longtime team doctor. Nassar was sentenced in February to as long as 125 years in prison after he pleaded guilty to molesting 10 girls.

The Texas prosecutors said some of the documents were delivered to Penny at USA Gymnastics' headquarters in Indianapolis and that they remain missing. The indictment alleges that Penny, knowing an investigation was in progress, intentionally destroyed or concealed the materials on or around Nov. 11, 2016.

The tampering charge is a third-degree felony carrying a maximum term of 10 years in prison.

Penny has denied that there was any cover-up and has said he is "repulsed" by Nassar's crimes.

His attorney, Edith Matthai, said "no attempt was made" to make contact with Penny before his arrest. She said that her client had been in Tennessee on a family vacation with his wife and three children when marshals arrived and that he was unaware of the indictment.

"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 in a statement. "Mr. Penny has not and would not have attempted to avoid the service of a summons and he cooperated fully" with the marshals.

In a statement to NBC News, Sen. Jerry Moran, R-Kan., chairman of a Commerce subcommittee that has been investigating USA Gymnastics and compelled Penny to testify earlier this year, said the allegations indicated that the top echelons of the organization were involved in a cover-up.

"Steve Penny's indictment and arrest further illustrate what we already knew to be true — under Penny's leadership, USA Gymnastics went to great lengths to alleviate its institutional liability in response to sexual misconduct by Larry Nassar, when that effort should have been spent protecting young athletes," he said.

"This indictment, coupled with Penny's unwillingness to cooperate in our subcommittee's investigation, highlights the systemic leadership issues within USAG that survivors have been sharing with us for months," he said.

The arrest comes six months after an NBC News investigation revealed that Penny had reached out to several top U.S. gymnasts in what they believe was an attempt to silence them as the Nassar scandal was unfolding.

Text messages, emails and other materials supported the claims by athletes and parents that Penny and others at USA Gymnastics stressed discretion above all else, even as the gymnasts and their parents pushed to meet with law enforcement officials. The gymnasts told NBC News that they felt that not following Penny's warnings would jeopardize their potential spots on the Olympic team.

"There are very few people in the loop on this. Very, very few," Penny texted one of the gymnasts, Aly Raisman, in July 2015, explaining that he was planning to speak with a consultant whom USA Gymnastics had hired to interview possible victims. "Most important is to address the issue with privacy and confidentiality in mind. I will be working through next steps as soon as I get the game plan in order."

Raisman and her mother said Penny repeated the message every time they brought it up with him for more than a year. "He would just say, 'Please be quiet,'" Raisman said in an interview.

Her teammate McKayla Maroney said she received similar warnings: "He told me, don't tell anything to anybody."

Maroney said the continued admonishments made her think that USA Gymnastics was more concerned with controlling public perception than stopping a sexual predator.

"I think it's less about him and more about them knowing that this was going to come crashing down, and they wanted to cover it up for as long as possible," she said.

A representative for Penny denied the allegations, saying he "did not intend to discourage any athlete from speaking with any law enforcement agency."

In June, Penny invoked his Fifth Amendment right against self-incrimination in an appearance before the Senate subcommittee.

Others at the hearing testified that Penny ordered six top USA Gymnastic officials not to discuss the Nassar case with anyone; he has also been accused of having waited more than five weeks to notify the FBI of the allegations against Nassar.

Rhonda Faehn, the former head of the U.S. women's gymnastics program, told the subcommittee that an employee named Amy White was tasked with removing documents from the Karolyi ranch and taking them to the team headquarters in Indianapolis.

White "told me she was ordered by Steve Penny to remove the records and bring them back to Indianapolis," Faehn said in a written follow-up statement to the committee.

Faehn was unaware of the date the documents were transported, but she told the subcommittee that White had told her that the records were removed in a "large suitcase and two large boxes."

Kerry Perry, then the chief executive of USA Gymnastics, confirmed Faehn's account when she testified before Congress in July. Perry said she was told there wasn't a "sort of logging in" of the records. "But those documents were given to then-CEO Steve Penny," she said.

Perry added: "To my knowledge, they do not exist in our custody."

Penny resigned under pressure last year after 12 years in charge of USA Gymnastics. He was being held in Sevier County, Tennessee, on Wednesday night awaiting extradition to Texas.

Last December, Maroney sued USA Gymnastics, claiming that the organization tried to silence her by making her sign a non-disclosure agreement as part of a financial settlement she needed to pay for psychological treatment. Maroney's attorney, John Manly, said Penny was directly involved in the settlement negotiations.

USA Gymnastics said in a statement after the suit was filed that "the concept of confidentiality" was initiated by Maroney's attorney at the time of the settlement, Gloria Allred, who asked the organization to take part in a "confidential mediation process."

The Texas charges against Penny came one day after former U.S. Rep. Mary Bono resigned as interim president and chief executive, less than one week into her new role. Bono stepped down amid intense criticism from top gymnasts, who said the organization still wasn't doing enough to reform itself.

U.S. Olympic Committee Chief Executive Sarah Hirshland said in a statement Thursday morning: "We continue to cooperate with any and every investigation as we seek to provide safe and positive environments for athletes to train and compete."

USA Gymnastics said in a statement: "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."

Reached on Thursday, Bela and Martha Karolyi declined to comment.

The FBI is also under scrutiny for its handling of the allegations against Nassar. The Justice Department's inspector general opened an investigation in recent months and has contacted several victims.

The investigators are probing why it took the FBI at least nine months to open a formal investigation after USA Gymnastics first reported the athletes' allegations in July 2015.