(WBIR) The first of four suspects accused in a drug conspiracy case in Cocke County appeared in federal court Thursday.

A grand jury indicted Newport Police Captain James Holt on several federal charges related to money laundering. Officials also arrested Holt's wife, Kathy, who is Newport alderwoman. Kathy Holt's son, Kenny Myers, and Newport Police Captain Roger Lynn Shults are also facing charges.

MORE: 2 police captains among 4 indicted in money laundering case

James Holt appeared in federal court in Greeneville Thursday morning. The hearing dealt with just the federal charges, which include distributing hydrocodone in May 2014 and possessing a firearm while committing that crime. If convicted, Holt could spend up to 20 years in prison for the first count with an additional mandatory five years to life for the second charge.

Newport Police Chief Maurice Shults said the department suspended both Holt and Roger Lynn Shults without pay.

The Tennessee Bureau of Investigation said James Holt, who is a detective, sold drugs in exchange for items he knew were stolen, according to court documents.

READ: Complaint and affidavit on James Holt (PDF)

TBI agents said this exchange happened from his police car where he was carrying a gun. He then sold the stolen merchandise as new at his wife's gas station, according to the TBI.

FBI and TBI agents searched the Pitstop Mobil Mart off Cosby Highway and got search warrants for the Newport Police Department.

The other people charged in the money laundering case only face state charges. James Holt also faces money laundering and official misconduct charges in state court.

TBI said the investigation took several months, and it's still looking into the case. Cocke County is no stranger to corruption. Just eight years ago, the Los Angeles Times dubbed Cocke County as "Little Chicago." The nickname stems from a five-year investigation called Operation Rose Thorn, which began in 2001.

Over a seven-year period, the investigation led to 48 arrests on federal charges, including the arrests of seven officers from the Newport Police Department and county sheriff's department. Charges ranged from money laundering, theft, conspiracy to distribute cocaine and trafficking stolen goods.

Another 170 people faced charges for cockfighting, gambling, and illegal liquor.

Cocke County Sheriff D.C. Ramsey resigned during that investigation, citing health reasons.