When many cities, including Milwaukee, exceed their budgets for settlements and judgments related to police misconduct, they utilize taxpayer-funded bonds with high interest rates to cover the costs of lawsuits. This creates an avenue for banks and investors to profit from police brutality, according to a report released Tuesday by the Action Center on Race & the Economy (ACRE).
The release of the report comes the same day a civil rights lawsuit on behalf of Milwaukee Bucks player Sterling Brown is expected to be filed in federal court. Brown was thrown to the ground and tased while being arrested for a parking violation on Milwaukee’s South Side in January.
According to the ACRE analysis, banks and investors have profited to the tune of $3.7 million, the amount of interest and service costs collected on $26 million in “police brutality bonds” issued between 2008-2017. That brought the total cost to taxpayers to $29.8 million.
ACRE is a national racial justice and Wall Street accountability campaign based in Chicago. The police brutality bonds are actually municipal bonds issued by local governments in which banks serve as underwriters. Banks then facilitate bond sales to buyers, the report states.
The study examined the increasing cost of police brutality in 12 counties and cities, including Milwaukee. Each took out millions in bonds to cover settlements, with Chicago borrowing $709 million and paying $1 billion in interest between 2010-2017. The report found that rather than serving as a deterrent for abusive policing, high settlement payouts “appear to be an acceptable cost of business of policing for cities and counties across the country.”
Furthermore, the report states, violent police officers and their departments are shielded financially from lawsuits, settlements can function as hush money and there is a lack of transparency and disclosure about the practice of bonding to cover police brutality settlements.
A Milwaukee case study included in the report described the city’s borrowing as “habitual,” finding that it authorized loans for settlements in eight of the past 10 years. The report notes that Bank of America, Wells Fargo and other firms have collected more than $260,000 for their services related to police brutality bonds in Milwaukee.
Local cases cited, in which bonds were used to finance settlements, included that of Chante Ott, who received a $6.5 million settlement after spending 13 years in prison for a murder he didn’t commit; a $5 million class-action settlement for illegal body cavity searches; and $2.5 million paid to a woman who was strangled and raped by a Milwaukee police officer after calling 911 for help.
According to the report, Milwaukee budgets $1.2 million each year to cover police settlements and judgements, yet in 2017 authorized $7.4 million in payouts and other expenses.
Bonds also cover the costs of defending officers accused of misconduct in court, including Zachary Thoms and David Letteer, who were brought to trial for their roles in the 2011 death of Derek Williams, 22. Williams’ death was recorded by an in-squad camera that captured officers ignoring his repeated claims that he couldn’t breathe. Neither officer was disciplined as a result, though the Common Council authorized a payment of $23,000 to settle the claim.
The report also addressed the Department of Justice investigation into MPD patterns and practices and the American Civil Liberties Union lawsuit related to 350,000 unconstitutional police traffic and pedestrian stops. The city and ACLU reached a tentative $1.9 million settlement of that lawsuit in April.
The report made several recommendations for cities, including prohibiting banks and private investors from profiting from police violence and forcing officers to take out individual liability insurance policies to cover the costs of settlements. The report also called for full transparency concerning officer actions that lead to settlements; if or how they are held accountable; and who is profiting from the payments.
Wow. Those interest rates are almost as bad as a payday loan!
I think the officers should have to take out personal liability insurance policies. Deduct it right from their paycheck. Make it a condition of employment. Ready to retire? Never had to use the insurance? Get all the premiums back monthly along with your pension.
It’s obvious $1.2 million isn’t enough to cover the crap that the MPD aggressive police officers look to their bailout.
Shelley Decker says
In the “old days” police were required to purchase liability insurance to cover their bad actions. Governments didn’t pay up with taxpayer dollars. I think we need to return to that system.
Michael Zahn says
The other two commenters have made a good point: Why are these settlements not covered under a professional liability policy? Something for the reporter to follow up on?
The tone of the story is, I think, unfair to the bond holders. They don’t know or care why the bonds were issued. Bonds are used for many civic purposes, such as sewerage and other infrastructure. Nobody would write a story accusing banks and investors of benefiting from leaky sewer pipes and bad roads, so it is dumb to suggest that they are getting fat off of police misconduct.
As a footnote, the old Socialist mayors of Milwaukee did not believe in borrowing money for any purpose, and it was not untll the Socialists faded from history that Milwaukee joined other municipalities in having large amounts of bond debt.