Newport alderwoman, police captains, indicted in TBI investigation

Posted on Thursday, July 24, 2014 at 11:43 am

TBI agents process the Dodge Charger assigned to Newport Detective Captain James Holt. The adjacent silver Ford Fusion was assigned to Newport Detective Captain Lynn Shults.

TBI agents process the Dodge Charger assigned to Newport Detective Captain James Holt. The adjacent silver Ford Fusion was assigned to Newport Detective Captain Lynn Shults.

Two Newport police officers and a Newport alderwoman were among the four individuals indicted Wednesday by a Cocke County grand jury in connection with an ongoing drug, money laundering and stolen property investigation.

Those indicted include Newport Alderwoman Kathy Holt, 50, and her husband, Detective Captain James Holt, 59, and son, 31-year-old Kenneth Myers.

The fourth person indicted was Newport police Captain Lynn Shults, 54, brother of Newport Chief of Poice Maurice Shults.

Director of the Tennessee Bureau of Investigation Mark Gwyn and Fourth Judicial District Attorney General Jimmy Dunn held a news conference to announce the indictments in the misconduct case involving the sale of stolen goods and prescription pills.

At Dunn’s request, TBI special agents began investigating James Holt April 16. During the course of the investigation, agents developed information that Holt bought and sold stolen goods on several occasions at the store owned by his wife, Kathy Holt.

Additionally, inve–stigators say James Holt bought and sold prescription drugs, including hydrocodone and Xanax and that some of the transactions occurred in a school zone while Holt was on duty.

The investigation also revealed Lynn Shults participated in the illegal activity, though to a lesser extent, while on duty.

Investigators also allege Kathy Holt was complicit with the operation and that Myers was also involved.

Wednesday, Dunn announced a special session of the Cocke County grand jury returned indictments for all four individuals, charging Det. Holt with 10 counts of official misconduct, eight counts of money laundering, one count of conspiracy to commit money laundering, and five counts of sale and delivery of a controlled substance.

Shults is charged with four counts of official misconduct and one count of conspiracy to commit money laundering.

Alderwoman Holt is charged with one count of conspiracy to commit money laundering and three counts of money laundering.

Myers is charged with one count of conspiracy to commit money laundering.

Money laundering involves comingling legitimate income with income derived from illegal activities in an effort to hide the criminal activity.

Det. Holt was booked into the Washington County Jail, while Schults, Kathy Holt and Myers were placed in the Cocke County Jail.

TBI special agents executed search warrants at the Newport Police Department, the detectives’ official vehicles and Kathy Holt’s store, the Pit Stop Mobil Mart, on Cosby Road.

Investigators from the U.S. Attorney’s Office, the Tennessee Highway Patrol, the Tennessee Department of Revenue and the Tennessee Office of the Comptroller are also involved in the investigation, which continues at this time.

Federal authorities Wednesday also announced Detective Holt is named on a federal criminal complaint charging him with the illegal distribution of drugs and the possession of a firearm in furtherance of drug trafficking.

The two-count federal complaint naming James Holt was filed with the court by FBI Special Agent Jeffrey Blanton. It charges the detective with distribution of hydrocodone and possession of a firearm in furtherance of a drug trafficking offense.

It says both the TBI and FBI had been receiving reports of illegal activities by Holt prior to a confidential informant agreeing to cooperate in April.

“Holt has used his position with the Newport Police Department to engage in criminal activity,” the complaint alleges.

The informant said he had previously sold James Holt stolen items including cigarettes, candy, diapers, food items and other items, which then were stocked on the shelves of Holt’s two stores, Mobile Pit Stop and West End Exxon.

The complaint says on a number of occasions the informant took James Holt cigarettes, beef jerky and Harley-Davidson merchandise, which he presented as stolen items.

The transactions were recorded and in some instances were videotaped. The informant received payment of from one-fifth to one-third of the value of the merchandise.

The affidavit says Detective Holt wore his service weapon and badge during the transactions.

On two occasions Kathy Holt allegedly provided the informant with a list of items she would be willing to purchase.

Detective Holt on one occasion allegedly gave the informant the name of a suspect in a recent cigarette theft and asked him to contact the individual and attempt to purchase the stolen smokes.

The detective also allegedly provided hydrocodone and Xanax pills to the informant out of his city-issued vehicle, on several occasions in payment for the stolen merchandise.

The agent said TBI agents later purchased items from the store shelves which had been purchased by the Holts as stolen items.

On one occasion, Det. Holt told an individual working on behalf of law enforcement he was going to pick up the drugs. Agents of the TBI followed him directly to the Newport Police Department and straight back to the location where Holt delivered the drugs.

James Holt appeared for an initial appearance this morning before U.S. Magistrate Judge Dennis Inman.

He arrived in the courtroom handcuffed and shackled. The court appointed the federal public defender to represent the defendant and told Holt he faces up to 20 years in prison on the charge he distributed hydrocodone, plus a minimum mandatory five years to life on the charge he possessed a firearm during the drug trafficking offense.

The judge told Holt the grand jury will meet Aug. 12.

During the hearing, the defendant said he will attempt to hire his own attorney.

The case will be prosecuted by Assistant U.S. Attorney Robert Reeves, who argued for the defendant to be held without bond until his trial.

The prosecutor said Holt is a risk of flight and a risk to the community.

He said the alleged offenses were audio and videotaped, but after being taken into custody, Holt “tried to rewrite what happened in the incident.”

Reeves also said after Holt’s arrest, an unregistered sawed-off shotgun was found in his home.

Finally, the prosecutor said, while being transported to jail following the arrest, Holt told the agents he has nothing to live for.

So, since being placed in the Washington County Jail, he has been under a suicide watch.

Reeves told the court because of the serious offenses Holt faces, if he is convicted, he likely will spend the rest of his life in prison.

The prosecutor also said when the case is presented to the U.S. Grand Jury, Holt will likely be indicted for additional offenses.

Inman then set a preliminary and detention hearing for 9:30 a.m., Tuesday, July 29.

Gwyn said agents determined the two officers “bought and sold stolen goods while on duty and that Holt bought and sold hydrocodone and Xanax several times while on duty.” Gwyn went on to say Alderwoman Holt and her son were found to be complicit with the officer’s illegal activities.

He said the investigation is active and on going.

“We are saddened to announce these charges. It’s a blemish on the entire law enforcement community and for those of us who do our best to uphold the public trust and to maintain integrity,” Gwyn said.

Dunn said “the conduct giving rise to these charges is an embarrassment to the city of Newport, Cocke County and law enforcement in general. It is embarrassing because the very people entrusted with upholding the laws are the one who are now charged with violating the law.”

Dunn said his office remains committed to the unbiased enforcement of the criminal laws “on behalf of all the citizens of Cocke County and the Fourth Judicial District even, and especially when, the investigations are difficult, when they are complex and when they involve those who are sworn to uphold the law.”

-By Ray Snader, Tribune Correspondent

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