Chicago's wrongful conviction calamity leaves taxpayers on the hook for a fortune in claims

CHICAGO (WLS) -- The gleaming skyline in Chicago conceals a blistering legal infection that has created a city of big payouts.

The I-Team has been tracking hundreds of millions of dollars in settlements that have been paid, or will be, to men and women who were wrongly imprisoned; many subjected to police brutality.

A traffic stop turned gun battle in March may be headed to a sizable payday. Motorist Dexter Reed opened fire on Chicago police, who returned 96 shots, killing the 26-year-old. Reed's family filed a civil rights lawsuit and the I-Team has learned the city is now in talks to settle the case. The next court hearing is in two weeks.

This case is one of many now facing City Hall, and could result in settlements totaling billions of dollars. Those payouts are on top of $750 million for police brutality and wrongful conviction cases since the year 2000.

"It's an elephant in the room that no one's talking about," said Ald. Gil Villegas of the city's liability insurance.

These cases frequently pay out tens of millions of dollars and the city is having to cover what essentially is a massive deductible.

"Right now, we're insurable to $20 million, and then....anything above $20 million, the insurance company takes on. But yeah, we don't know what that premium looks like. And so all that risk out there is giving us pause," said Ald. Villegas.

He and several city council colleagues are pushing for a working group to address the crisis-cases that began when some of them were in high school. Now, they also want a "justice fund" to identify cases they expect to lose and then figure out how to pay the bill.

"I want to make sure that we are managing our risk properly. And I say that as someone, I have been a lawyer for 18 years. I mean, people that have been wrongfully convicted, it's, of course, beyond tragic. We can't give them the years back, but we need to make sure that we're dealing with that in a consistent way and in a responsible way," said Ald. Bill Conway.

As the I-Team has been reporting for nearly two years, one of the most expensive aspects of wrongful conviction settlements is the city's farming out of cases to outside law firms. Ald. Villegas pointed out this stat: $150 million in fees to private law firms. Records show those outside attorneys have won only 15-percent of their cases the past decade.

We asked the city for comment on our reporting and received the same statement from the City of Chicago Law Department that we have received in the past: "The City performs risk analysis of all pending litigation and has for years. As a fiduciary bound to act in the best interest of the taxpayer, we are deeply committed to identifying potential risks and exposure to the City. Because the City's internal analysis of pending and active litigation is privileged information, we cannot further comment."