The question: How could Michael have a former cop in such a high position?
The fact that Neri was of a certain mold AND had nothing else. He was forever indebted to Michael and family.
We never learn in the Trilogy that Neri was a cop--that was strictly in the novel. IMO, it was one of the best "backstories" of the novel that didn't make it into the Trilogy.
Michael's recruitment of Neri was a master stroke:
SPOILER SPOILER SPOILERAt that point, as you said, he had nothing: kicked off the force, tried and about to be imprisoned for killing a murderous junkie s**theel. Michael showed him he was valued, that he regareded Neri as a hero, that he wanted to recruit him. Michael at his most brilliantly manipulative.