A Chicago police sergeant and an officer who works for him on a West Side gang squad pleaded not guilty Thursday to federal charges alleging they lied to judges to obtain search warrants and then stole cash and drugs they seized in raids.

The arraignment marked the first time Sgt. Xavier Elizondo, 45, and Officer David Salgado, 37, appeared in court since their indictment earlier this month on charges of embezzlement and conspiracy to commit theft. Salgado is also charged with one count of lying to the FBI.

After a brief hearing before U.S. District Judge Matthew Kennelly, the officers left the Dirksen U.S. Courthouse free on bail. Salgado, who had donned a baseball cap and sunglasses after court, kept his head down and a cellphone pressed to his ear in an apparent bid to stymie news photographers in the lobby.

Salgado’s lawyer, Michael Petro, told reporters Salgado has been an “exemplary officer” in his 15-year career and is holding up well since being charged “despite being under a lot of pressure from the job.”

Petro said the charges were largely based on “unreliable informants” and known drug abusers. Salgado looks forward to his day in court, he said.

Elizondo’s attorney, Michael Clancy, declined to comment.

Both Elizondo and Salgado have been on paid desk duty at the city’s 311 center since January. During Thursday’s hearing, lawyers for both officers argued against a bond restriction barring them from possessing a firearm. That would automatically put them on no-pay status with the Police Department.

Kennelly set a hearing for next Tuesday to deal with that issue.

The charges against Elizondo and Salgado marked the latest in a long line of embarrassing cases for the Chicago Police Department — some stretching back decades — in which officers have been caught allegedly profiting from the drug trade they were supposed to be investigating.

But the allegations against Elizondo and Salgado contain an added twist. Instead of kicking down doors in warrantless searches or pulling over drug dealers without probable cause, the officers had informants falsely testify before Cook County judges in order to obtain search warrants, according to the charges.

They then used the warrants to carry out what appeared to be legitimate raids on property of suspected drug dealers, according to the charges. But instead of properly inventorying what they seized, the two stole the seized drugs and cash — and gave a share of the proceeds to the informants for their assistance in the scheme, according to the charges.

The ongoing probe also threatens to have a ripple effect on dozens of criminal cases at the Leighton Criminal Court Building, where defense attorneys have been talking for months behind the scenes about possible legal challenges to warrants filed by Elizondo’s team.

A spokesman for State’s Attorney Kim Foxx said in a statement after the charges were announced that the office “is reviewing cases” involving Elizondo and Salgado but did not elaborate.

jmeisner@chicagotribune.com

Twitter @jmetr22b

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