James Rainwood (Tom Selleck) is a model citizen. He is happily married to a beautiful woman, has a modest home in Long Beach, California, works as an engineer for American Airlines, drives a classic Pontiac Trans Am, pays his bills, and enjoys his ordinary life.
Detectives Mike Parnell (David Rasche) and Danny Scaliese (Richard Young) are two corrupt cops who specialize in making drug busts. Rather than completing the busts properly and handing over all the drugs as evidence, they always steal a portion for their own use or for resale to other dealers.
After taking a cocaine hit and being unable to concentrate properly, Parnell takes down the address incorrectly for his next drug bust. Instead, they break into Jimmie's home, expecting to find drugs. When Rainwood walks out of the bathroom with a handheld hair dryer in hand, Parnell shoots him, thinking it's a weapon. In order to cover up their mistake, they frame Jimmie by planting drugs throughout his home and putting a firearm in his hand. With false evidence stacked up against him (and a previous marijuana charge during his college years) and his only defense being his word against two cops, he receives a 6 year prison sentence.
Jimmie is less than well versed to the horrors of prison life, something demonstrated well when he first witnesses a man get stabbed with a screwdriver and set on fire. Not long after his arrival, a vicious prisoner named Jingles and his gang, the Black Guerrilla Family take an interest in Jimmie. After getting savagely beaten by Jingles and his gang and being threatened with sexual assault, Jimmie comes to realize that all the rumblings about having to "take care of his problem" is his only recourse.
With the help of a benevolent and influential convict named Virgil Cane (F. Murray Abraham), a plexiglas shank is fashioned for Jimmie. He stabs Jingles to death, and ends up spending three months in a windowless, subterranean solitary confinement, though the guards are unable to prove Jimmie did the job.
Upon his release back to general population, Jimmie is received as a minor hero. Upon getting paroled after three years, he sets out to seek revenge on the detectives who framed him. Malcolm (M.C. Gainey), another ex-con Jimmie befriended on the inside, assists Rainwood in his cause, along with Jimmie's wife Kate (Laila Robins), who learns of Scalise and Parnell's involvement in the cover-up when they begin to harass her. An Internal Affairs detective, John Fitzgerald, becomes involved after Kate tells him about a racist remark Parnell made (falsely) about Fitzgerald and his department. Parnell makes the mistake of telling off Fitzgerald after being confronted about the Rainwood case, making Kate's lie seem more truthful and Fitzgerald now more determined than ever to find the truth.
The harassment of the Rainwoods escalates as they get closer to the truth. The movie's climax is a showdown and shootout that leaves Scalise dead after crashing his car and Parnell about to die at the hands of Jimmie by Parnell's own switchblade. As Jimmie is about to kill Parnell, Kate speaks up. Jimmie throws Parnell to the ground, leaving him to his soon-to-be-former colleagues.
The movie ends with Parnell in the general prison population (a creative liberty, as convicted ex-cops are generally kept in protective custody or are housed in an out of state Federal prison), and spotted from a distance by Virgil, who openly addresses him as "Officer", drawing the attention of the other inmates.
Parnell looks up to the balcony where Virgil is standing, his face frozen in a mask of fear. "Ain't life a motherfucker?" Virgil asks, repeating a line he stated when he and Jimmie said their goodbyes earlier.
The movie ends with the final scene showing the epilogue of Jimmie Rainwood's life, working again for American Airlines, finally getting his life back.
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