‘They shot the wrong guy’: Wisconsin cops accused of shooting hostage who was suing them for $50 million

Police shot and killed a man Saturday afternoon during an armed standoff at a Wisconsin motorcycle shop -- but friends say the victim was a hostage.

The standoff began shortly before 9 a.m. at Eagle Nation Cycles in Neenah, where owner Steve Erato said an armed man demanded the return of his motorcycle, which had been sold to another man and brought to the shop for repairs.

Erato came upstairs from the shop's basement to check on the commotion, but he said an employee and friend -- Michael Funk -- silently warned him to return downstairs.

The gunman held Funk and two customers hostage while Erato stayed in contact with police from his hideout in the basement.

Police tried to enter the building at one point but were met with gunfire, and one officer was struck by a bullet in his ballistic helmet and was not injured.

A short time later, police opened fire when they saw an armed man leave the building.

Police have not said who that man was -- but Erato and others say it was the 60-year-old Funk, not the hostage-taker.

“This subject did not comply with officers’ instructions to drop the firearm and was subsequently shot at by one or more officers on scene,” police said in a statement. “We do not know if he was also shot at by the subject inside the business.”

Hostage negotiators talked the suspect into freeing the other hostages, and the gunman eventually surrendered about 1 p.m.

The suspect's name has not been released by police.

Funk, a Vietnam War veteran, was suing the city of Neenah, its police, and the Winnebago County Sheriff’s Department for $50 million over a 2012 raid at the motorcycle shop.

Police raided the shop as part of a heroin and methamphetamine investigation, and Erato was charged with 26 felonies -- all of which were later dropped -- and pleaded no contest to a misdemeanor charge of possession of marijuana.

Funk was ordered to the ground during the raid and told police that he was lawfully carrying a concealed weapon, but the lawsuit claims officers pointed guns at his head and terrified him as they took him into custody.

Erato said he doesn't believe Funk would have fought with or threatened police after escaping the gunman who had been holding him hostage.

“I can’t imagine that he had a gun on him and wouldn’t use it on the shooter and would run out and threaten the cops,” Erato said. “It just doesn’t make any sense.”

“He was a hostage coming out (of the building),” Erato said. “They shot him in the alley. They shot the wrong guy.”

Watch this video report posted online by WITI-TV: