The cops didn't believe Karen?

What I think happened:

The Good Guy execs were only relying on third party/tabloid based information. They only know what they *heard* about the case, which was that the cops denied the story.

Norris and his friend backed Karen's story... at first. When it looked like they were all going to get locked up, Karen and Mike agreed that Mike would *deny* the story so he could stay behind and watch out for Andy. While Karen was locked away, Mike would keep him out of trouble.

Now, since Chris Sarandon wasn't isn't sequels, all of his help was offscreen. He couldn't get custody of Andy, but helped out where he could. He could have even pulled the strings to get Andy into Kent Military Academy instead of Andy ending up in juvenile hall.

Had Sarandon been asked back for the sequels, we might have seen Andy living with Mike until his mother recovered.

"What kind of scary ass clowns came to your birthday party?"

The cop's union rep dangled his bloated pension over his head and said that if you try to tell the truth, you're gone and so is that pension. This is literally how police departments work.