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D.A.'s office nears bankruptcy over payout

New Orleans' new district attorney is warning that his office may need to file for bankruptcy protection because it can't pay $15 million to a wrongfully imprisoned man.
/ Source: The Associated Press

New Orleans' new district attorney is warning that his office may need to file for bankruptcy protection because it can't afford to pay $15 million to a man who spent 18 years on death row before being exonerated.

District Attorney Leon Cannizzaro has asked for state authority to file for bankruptcy over the jury award to John Thompson, who was convicted in 1985 of killing hotel executive Raymond Liuzza Jr. An appeals court upheld the civil judgment last month.

Cannizzaro, who inherited the five-year-old civil case when he was elected in November, said his office will exhaust its appeals before deciding if a Chapter 9 bankruptcy filing is necessary.

"I just want to have that option available if it is necessary for me to do that," he said.

Alan Goodman, a lawyer who once taught a bankruptcy course at Tulane Law School, said assets aren't liquidated in a Chapter 9 case, but it theoretically could harm the state's credit rating.

"The only advantage is that you're putting off the inevitable of having to repay the debt," Goodman said. "I think it's all a big bargaining tactic."

Thompson attorney Michael Banks also questions whether the bankruptcy threat is a negotiating tool.

"It's hard to say what's a negotiating tactic because they've never been willing to negotiate with us," Banks said of Cannizzaro's predecessors. "It's very disappointing because our goal is to get just compensation for John Thompson."

A spokesman said Gov. Bobby Jindal's office plans to meet with Cannizzaro to discuss the request. Attorney General James "Buddy" Caldwell already has authorized Cannizzaro to file a petition, but state Treasurer John Kennedy expressed reservations.

"I'd rather not see any entity take bankruptcy," he said. "I'm hopeful that they think it through very carefully first. It's a pretty draconian step."

The budget for the district attorney's office includes a mix of state and city funding. A year ago, the district attorney's office paid off a separate $3.3 million judgment in a discrimination case that had left the office vulnerable to having its assets seized.

Harry Connick was the district attorney when Thompson was convicted of killing Liuzza, who was robbed and gunned down outside his New Orleans home on Dec. 6, 1984.

Only weeks before Thompson was to be executed, investigators uncovered a crime lab report indicating he had been wrongly convicted of an unrelated attempted armed robbery. Prosecutors had used that conviction to help secure Thompson's conviction in the Liuzza case. Thompson was retried for murder and found not guilty.