Prosecutors say Earl Mayo sold a gun to a pawn shop.
That gun was considered evidence in a criminal case.
Mayo faces several charges, including official misconduct, in Lake County, Indiana.
He's also charged with obstruction of justice, theft and unlawful possession of an anabolic steroid
Acting Chief Antoine Goffin said the entire New Chicago Police department is undergoing ethics training, to regain the public trust.
Mayo has five days to appeal the town's decision.
Mayo was arrested last month in Clark County, Ohio.