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As Exoneration Claims Rise, Firms Give Inmates Expensive Advances

After nearly 20 years in a New York prison for a 1989 murder he did not commit, Huwe Burton walked out with no money, no credit and no one to borrow from. Burton, a former elevator repairman, could sue for millions in compensation, but payouts take years. After his 2019 exoneration, Burton took an advance of $500,000 from a company that funds plaintiffs waiting to settle auto insurance claims, slip-and-fall judgments and medical malpractice cases. Burton’s advance, at 28 percent annual interest, came from USClaims, a Florida company. Exonerations and cash settlements have risen thanks to DNA-based reinvestigations, conviction-integrity units created by prosecutors and innocence organizations. The billions in payouts have attracted companies offering high interest cash advances while exonerated people await their claims. Many firms are backed by private equity investors eager to bet on nearly certain short-term profit, the New York Times reports.

If prisoners fail to collect a payout, the advance is forgiven. If the claims come through, which they usually do, the company makes a healthy profit when the exoneree pays in full, often from a settlement that far outstrips the size of the debt. Burton was a good investment. Wrongful conviction cases are good bets because they have often gone through years of appellate court scrutiny and have been vetted by the lawyers handling the claims, said USClaims president Donna Lee Jones. She said that in the eight years of taking such cases, she has seen a rise in demand. This year, a record 367 cases have been added to the National Registry of Exonerations, which usually records some 200 each year. A total of $2.65 billion nationwide has been paid to people on the registry who have brought civil rights suits, says Jeffrey Gutman, a law professor at George Washington University. The average payout is $3.7 million for the 716 exonerees who collected compensation, or $318,000 per year in prison. For Burton, now 50, the advance was “a reset button, a chance to balance things out” until his settlement offered him true stability.

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