California Juvenile Lawsuit: $4B Payouts Halted in Fraud Probe

The Los Angeles County juvenile sexual abuse settlement is a $4 billion agreement approved in April 2025 to resolve more than 6,800 claims of abuse in county-run juvenile halls, foster placements, and the MacLaren Children’s Center, with alleged conduct going back to 1959. It is the largest payout in county history. A second $828 million agreement followed in October 2025 covering an additional 414 claims. As of mid-2026, no money is reaching claimants: the LA County District Attorney has opened a criminal fraud investigation, a judge has halted payments, and attorneys warn that elderly survivors may die before the dispute is resolved.¹²

What the Settlement Covers

The claims span a network of county institutions. Alleged abuse occurred in Probation Department juvenile halls, in foster placements overseen by the Department of Children and Family Services, and at the MacLaren Children’s Center, a temporary shelter in El Monte that operated from 1961 until it closed in 2003. Most of the conduct described in the claims took place in the 1980s, 1990s, and 2000s, though the settlement reaches back as far as 1959.³¹

Individual payouts under the $4 billion deal were designed to range from $100,000 to $3 million, with amounts set by an independent team of allocation experts based on the facts of each claim. The county plans to fund the settlement through cash reserves, judgment obligation bonds, and departmental budget cuts, with annual payments running through fiscal year 2050–51.⁴¹

The Board of Supervisors unanimously approved the deal on April 29, 2025. County CEO Fesia Davenport issued a public apology, calling the acts “reprehensible” and pledging systemic changes. Supervisor Hilda Solis called the situation a “bad stain on the county,” and Davenport recommended ending the county’s practice of “progressive discipline” for staff involved in abuse cases in favor of immediate termination after a completed investigation.³

How California Law Made Old Claims Possible

The settlement exists because of Assembly Bill 218, signed by Governor Gavin Newsom in October 2019 and effective January 1, 2020. The law extended the statute of limitations for childhood sexual abuse lawsuits in California, giving survivors until age 40, or five years after discovering the connection between their injuries and the abuse, to file a civil claim. It also created a three-year lookback window, running through December 31, 2022, that allowed survivors of any age to file claims that had previously expired. And it permitted courts to award triple damages against defendants found to have covered up abuse.⁵

For the LA County cases, the pivotal change was that AB 218 removed a prior restriction limiting claims against local government agencies to conduct occurring after January 1, 2009. That opened the way for decades-old allegations against public institutions to be heard. The law also requires plaintiffs age 40 or older to file a certificate of merit — a declaration from both an attorney and a licensed mental health professional stating they have reviewed the facts and believe the claim has a reasonable basis — before a defendant must even be served. That safeguard is now at the center of the fraud dispute.⁵

The Second Settlement and Growing Claim Count

The number of claims has not stopped rising. By autumn 2025 the total had grown from 6,800 to more than 11,000. On October 17, 2025, the county announced a tentative $828 million settlement covering an additional 414 cases that had been negotiated separately by three law firms: Manly, Stewart & Finaldi; Arias Sanguinetti Wang & Team; and Panish Shea Ravipudi. The average per-claimant figure in that smaller deal came to roughly $2 million.⁴

Counting both settlements plus an additional 2,500 pending lawsuits, the county faces over 14,000 total claims, with the figure still expected to climb. No other county or state entity in California has faced litigation on anything close to this scale.⁶⁷

Why Payments Are On Hold

On November 19, 2025, District Attorney Nathan Hochman announced a criminal investigation into potentially fraudulent AB 218 claims. His office is examining allegations that individuals were paid cash to let law firms file false abuse claims on their behalf. The probe covers claimants, attorneys, recruiters, and medical professionals. Hochman set up a fraud hotline and offered a limited form of immunity to non-lawyer claimants who came forward about filing false claims.⁸

In a letter dated January 9, 2026, Hochman asked the county to pause all settlement payouts for at least six months, citing an “irreparable loss of public funds and further harm to legitimate survivors.” The county and plaintiffs’ attorneys agreed to deposit roughly $396.4 million into a settlement trust while holding off on distributing funds to individual claimants.⁹

By June 2026 Hochman went further, asserting in a court filing that as many as four in five of the more than 11,000 claims — roughly 81% — may be fraudulent, alleging that the “vast majority” of plaintiffs were never housed in the facilities where they said the abuse occurred. He did not publicly explain how he arrived at that figure. As of mid-June 2026, no criminal charges, arrests, or indictments of attorneys, recruiters, or claimants had resulted from the investigation.²

Plaintiffs’ attorneys have pushed back hard. Patrick McNicholas, who represents roughly 1,000 clients, argued that because the settlement was already structured to pay out over five years, there was time to investigate without freezing payments. Survivors have noted that the loss of records from decades-old cases makes it nearly impossible to defend their claims against a blanket fraud accusation.²

Superior Court Judge Lawrence Riff, who oversees the bulk of the cases, acknowledged the tension at a June 15, 2026 hearing, asking from the bench: “Do I close my eyes to the district attorney coming in here saying there may be billions of dollars of fraud occurring?” He also said he had been largely kept in the dark about specifics: “We don’t really know what he has.” Riff ordered lawyers to halt all payments until a follow-up hearing on June 25, 2026. An attorney for the county confirmed that only a judge can officially stop settlement payments, meaning the DA’s requests carry weight but are not self-executing.¹⁰¹¹

One Firm at the Center of the Fraud Inquiry

Much of the scrutiny has focused on the Downtown LA Law Group, known as DTLA, which represents approximately 2,700 claimants, nearly a quarter of all claimants in the $4 billion settlement. The firm was founded in 2013 by cousins Farid Yaghoubtil and Daniel Azizi along with Salar Hendizadeh, and it is now the subject of overlapping investigations by the DA’s office, the LA County Counsel, and the State Bar of California.¹²

Allegations against DTLA include the use of third-party recruiters to sign up clients and the filing of fabricated abuse claims. County Counsel Dawyn Harrison issued a subpoena for the firm’s business records and sought court permission to share confidential case documents with the State Bar.¹³ On June 1, 2026, the State Bar charged three of the firm’s attorneys. Yaghoubtil faces 16 counts including practicing law without a license, charging illegal fees, and unauthorized representation. Azizi faces 11 counts, and litigation attorney Igor Fradkin faces four. Hendizadeh, who left the firm in October 2025, had already been charged in March 2026 on similar allegations tied to out-of-state practices conducted under the name “Lone Star Injury Law Firm” in Texas. The complaint alleges the firm signed up clients in eight states where it had no licensed attorneys.¹⁴

DTLA has denied all wrongdoing, stating it “categorically does not engage in, nor has it ever condoned, the exchange of money for client retention.” The firm has moved to block the State Bar’s review of its client records. Under both settlements, claims handled by DTLA are now subject to an additional layer of scrutiny, including potential interviews and requests for extra evidence, with the screening costs paid by the firm itself.¹⁴⁴

What Happens Next

The near-term question is whether Judge Riff lifts or extends the payment freeze after his June 25, 2026 hearing. The county had previously appointed two Superior Court judges to review claims for fraud, though the DA has argued his own office’s vetting process is “far superior.”¹⁰

The longer-term question is whether the law itself changes. Two 2025 bills — SB 577 by Senator John Laird and SB 832 by Senator Ben Allen — sought to modify AB 218’s liability provisions but stalled before reaching floor votes. Assembly Speaker Robert Rivas has assigned a group of lawmakers to develop new reform language, though as of March 2026 there was no public update on their progress.¹⁵¹⁶

A draft bill circulated by the California State Association of Counties would raise the burden of proof for claims involving abuse more than 20 years old to “clear and convincing” evidence, cap non-economic damages at four times economic damages, and require plaintiffs filing at age 40 or older to prove the public entity had “actual knowledge” of the harm. The Youth Law Center has opposed those proposals, arguing they would “roll back rights of child sexual abuse survivors, especially youth in state care.”¹⁶¹⁷

For now, no reform has passed and the settlement process remains frozen. Attorneys for survivors warn that the delay is itself causing harm: many claimants are elderly or in poor health, and some, their lawyers say, will die before they receive a dollar.

1
LA County. LA County Reaches $4 Billion Tentative Settlement in Thousands of Sexual Abuse Cases
2
Los Angeles Times. LA County DA Claims Four in Five Cases in $4 Billion Sex Abuse Payout May Be Fraudulent
3
Courthouse News Service. LA County Board Approves $4 Billion Settlement Over Sexual Abuse Claims at Juvenile Facilities
4
Los Angeles Times. LA County $828 Million Alleged Sexual Abuse Settlement
5
LegiScan. California AB 218
6
LA County. LA County Announces Tentative Settlement of Additional AB 218 Cases and Heightened Anti-Fraud Provisions
7
The Imprint. A Staggering Tally: Cases Alleging Sexual Abuse of Children in Los Angeles County Custody Now Number Thousands
8
LA County District Attorney’s Office. District Attorney Hochman Announces Criminal Investigation Into Potentially Fraudulent Claims
9
Claims Journal. LA County Told to Pause Abuse Payouts as DA Probes Fraud Claims
10
Los Angeles Times. Sex Abuse Settlement: Los Angeles District Attorney and Victim Payouts
11
The Recorder. LA DA Calls for New Pause on $4B Sex Abuse Settlement Payouts Citing Potentially Significant Fraud
12
Los Angeles Times. State Bar Investigation Into LA County Sex Abuse Settlement
13
LA Downtown News. False Reports: Investigation Into DTLA Law Group for Sexual Abuse Claims
14
Los Angeles Times. DTLA Law Firm California State Bar Charges
15
CalMatters. Sexual Abuse, Schools, and Promise in California
16
EdSource. California Child Abuse Lawsuit Reforms
17
Youth Law Center. California Legislation Would Roll Back Rights of Child Sexual Abuse Survivors, Especially Youth in State Care