Cities Cover Bad Cop Victim Settlements with “Police Brutality Bonds”

Cities Cover Bad Cop Victim Settlements with “Police Brutality Bonds”

A new story about police brutality settlements appears almost daily in the media. Taxpayers are the ones paying for this police misconduct, but one group is making out like bandits – Wall Street investors. That’s because cities are taking out police brutality bonds to pay for these settlements, and that money goes from city coffers to Wall Street.

The Action Center on Race & the Economy (ACRE) alleges that the use of such bonds may nearly double settlement costs.

Some of the top financial institutions in the nation – including Wells Fargo, Goldman Sachs, and Bank of America – are profiting from police brutality bonds.  In many cities, taxes are raised so that police settlements and judgments are covered.

Police Brutality Bonds

No city or municipality actually refers to these bonds as “police brutality” bonds, but they are often specifically issued to pay for police misconduct settlements.

They are general obligation bonds, which Investopedia notes are:

“Issued with the belief that a municipality will be able to repay its debt obligation through taxation or revenue from projects. No assets are used as collateral.”

While such bonds are often used to fund government projects for community purposes, they are also used to raise funds needed to pay the city’s unexpected debt obligations, like a multi-million police brutality settlement.

When a city has a revenue issue and is hit with a police brutality judgment, it is more likely to issue such a bond for that purpose.

From 2010 to 2017:

  • Chicago issued a whopping $709.3 million in police brutality bonds, which cost taxpayers $1.71 billion dollars and paid $1 billion to investors!
  • Los Angeles, from 2008 to 2017, issued $71.4 million in such bonds, costing taxpayers $89.4 million and earning investors $18 million.

Smaller cities must issue such bonds on an emergency basis when hit with a big police brutality settlement or judgment. That’s the case with Canton, Ohio, which had to issue $1.8 million in 2010 to pay a judgment after a man died from a beating while in police custody.

In 2017, New Haven, Connecticut decided to fund a $9.5 million settlement for a man who spent 18 years in prison after being framed for the murder by a police detective by raiding a bond fund already set aside for a bridge renovation project. New Haven will issue new bonds to pay for bridge in 2018.

South Tucson, Arizona, went into bankruptcy back in 1983 because of a $3 million judgment for a police shooting victim. The city then issued $2.1 million in bonds for debt repayment. Ever since, it’s been a constant cycle of issuing new bonds to pay off old ones, and their current debt service of $600,000 accounts for 12 percent of the small city’s budget. Police, meanwhile, are nearly always indemnified by their employers, so that their legal fees and subsequent settlements and judgments are paid.

Even worse, there are seldom any budget cuts to police departments due to excessive settlement costs. If cuts are necessary, some other area of the city budget is targeted.

Then there’s the hush money aspect. Basically, the victim or their family is given money so long as they sign away the right to discuss the situation. The exact circumstances and the officers involved are not publicly revealed, so the bad actors are usually still in place.

Cities seldom give full accountability when it come to these settlements and judgments. Their liability insurance may pay for part of the settlement, but then they must bond for the rest of the money.

Reforming the System – Recommendations on Police Brutality Settlements

ACRE has several recommendations in place to reform this grossly unfair system. First, if a city has to borrow to pay a police brutality settlement, investors and banks should not be permitted to profit.

Second, police officers must take out individual liability insurance policies in case they are involved in a police brutality incident. Settlements or judgment funds should come from these policies.

Government at all levels must provide transparency about the police officers accused of police brutality, including what they are allegedly doing to end up accused of such behavior, whether or not they are held accountable for their actions, who pays for such settlements and judgments and who, if anyone, make a profit from these settlements.

Our advocates, investigators, and lawyers help victims of police brutality and their families get full compensation for the abuse, neglect, and other misconduct. If you or a family member are a victim of law enforcement misconduct connect with us for a no-cost confidential consultation on your rights.  Report Online


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