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Sheffield Lake Police Chief Anthony Campo left a Ku Klux Klan sign on a fellow officer's desk, Mayor Dennis Bring said - claiming Campo had told him it was a joke.
In the footage, captured in the department's booking area, Campo can be seen walking into a room with a piece of paper in his hand.
He then walks over to a desk and places the paper on a yellow jacket, which Cleveland.com reports had been laid out to resemble the 'infamous hood and robe' synonymous with the American white supremacist hate group.
Campo returns to the other room as an unidentified black officer comes in to find the note.
The officer, who started working for the department nine months ago, can then be seen speaking to other people, showing them the note.
Mayor Bring said Campo told him the note was a prank, telling Cleveland.com: "He thought this was just a joke.
"How can you possibly think that you can put something on somebody's jacket like that, and especially if they were African American, and think this is a joke? This is the most egregious and offensive thing you could possibly do. And it's embarrassing and disgusting."
The incident was brought to Bring's attention on Tuesday (29 June) by Sheffield Lake Law Director David Graves, describing what happened as 'really serious'.
Bring went straight to Campo's office, saying: "I came into the chief's office, and he's standing there with a smile on his face.
"He goes, 'So, am I fired?'"
After Graves showed Campo the complaint, Bring told him he had 10 minutes to get out of the office, at which point Campo announced he would resign effective immediately - using his computer to type his resignation letter there and then.
Bring said he is unsure whether the victim plans to file suit, but said he would back him if he were to seek further action against Campo.
He has since had an emotional conversation with the officer, having spoken to him on Wednesday (30 June).
Bring recalled: "It took us 10 minutes to talk to each other because we both sat there crying," he said. "I apologized to him. I can't describe it in one word. This is not a mistake. This is something so egregious I can't describe it."
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