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Investors Front Money to Wrongful Convicted People Seeking Damages

Charles Johnson was released from prison in 2016, after serving 22 years for a crime he didn’t commit. He had one item of potential value: A lawsuit. He sued the city of Chicago and its police department, alleging that police coerced Johnson and three others into confessing to a double murder. Juries in Chicago, dubbed “the wrongful conviction capital of America,” have handed down verdicts as high as $25 million in similar cases. investors are eager for a slice of that money. The proliferation of litigation funding., where financiers bet on lawsuits hoping for high returns, has extended to civil rights claims by the wrongly convicted. Some funders are willing to provide exonerees as much as $1 million in upfront cash, reports Bloomberg Law.

The exoneree keeps the money even if the case is a loser. If it’s a winner, the person can be forced to pay back as much as three times the amount of money fronted. Most states have laws providing compensation to those who can verify their innocence. Civil lawsuits are a longer-shot effort to prove the conviction was the result of police misconduct. Money from outside funders can fill a financial gap between the time someone is released and when states pay up, which can take years. Some people who have had convictions overturned—and their lawyers—balk at the interest rates that come with funding deals, which can be similar to those charged companies by investors funding commercial disputes.