I know you don't want to believe it's possible a trusted establishment in our society can commit crimes but there is evidence that this happens.
Oh it's very possible. Certainly law enforcement has had its share of "bad apples". I can see them doing things with his case in order to make him appear even more guilty that he was. But I can not see them going into cohoots with either A: the real killer or B: they (law enforcement) being the real killer(s) just to get S. Avery off the streets.
As BK pointed out, him being convicted of this crime would not stop the lawsuit as part of his previous incarceration.
Nor would the $36 mil come out of the pockets of law-enforcement. What do people think, that whey would simply write the guy a check, shut down the county and get rid of all law enforcement? That's not how it works.
I read a lot of true-crime, I watch a lot of true-crime and I've never heard of a case of someone in law-enforcement killing an innocent person just to set someone else up... has it ever happened? Probably, but it's got to be incredibly rare. And the only way I could see it happening was if the law-enforcement person involved was going to get some sort of huge payoff– and there was no huge payoff here.
In addition trying to keep a conspiracy secret a secret works a heck of a lot easier when you only have one person involved, but if this spun out so that that law-enforcement was more involved in the actual killing of the girl or working with the real killer– well now you've got numerous people involved... and with more people the more likelihood someone talks. Again if there was some sort of huge payoff the cops were going to split is one-thing, but with no big pot to split and with the murder of an innocent... I simply do not buy it.