California Juvenile Lawsuit: $4B Payments Frozen by Fraud Probe

Los Angeles County’s $4 billion juvenile abuse settlement, approved in April 2025, resolves more than 6,800 claims of sexual abuse in county-run juvenile halls, foster placements, and the MacLaren Children’s Center dating back to 1959. It is the largest payout in county history. As of mid-2026, no survivor has been paid: the District Attorney is investigating allegations that a large share of the claims may be fraudulent, and a judge has ordered all distributions frozen.¹²

What the Settlement Covers

The Board of Supervisors unanimously approved the $4 billion deal on April 29, 2025, after CEO Fesia Davenport announced the tentative agreement earlier that month and issued a public apology calling the acts “reprehensible.”³¹

The claims span decades and multiple county institutions:

Probation Department juvenile halls
Foster care placements overseen by the Department of Children and Family Services
The MacLaren Children’s Center, a temporary shelter in El Monte that operated from 1961 until it closed in 2003

Most of the alleged abuse occurred in the 1980s, 1990s, and 2000s.³ Former MacLaren residents alleged that staff sexually assaulted children as young as five, administered powerful psychiatric medications without valid diagnoses, and beat children who reported abuse. A 2001 LA County Civil Grand Jury investigation found the facility had gone decades without conducting criminal background checks on employees, and a subsequent state licensing review identified 17 staff members with disqualifying criminal records.⁴

Individual payouts under the settlement were designed to range from $100,000 to $3 million, with awards set by an independent team of allocation experts.⁵ The county plans to fund the deal through cash reserves, judgment obligation bonds, and departmental budget cuts, with annual payments continuing through fiscal year 2050–51.³

Why Decades-Old Claims Could Be Filed at All

Most of the alleged abuse would have been time-barred under prior California law. Assembly Bill 218, signed by Governor Gavin Newsom in October 2019 and effective January 1, 2020, changed that. The law extended the statute of limitations to age 40 or five years after a survivor discovers the connection between the abuse and their injuries, and opened a three-year “lookback window” through December 31, 2022, during which survivors of any age could file previously expired claims. It also removed a restriction that had limited claims against local government agencies to conduct occurring after January 1, 2009, which is what put decades of county conduct back on the table.⁶

For plaintiffs age 40 or older, AB 218 requires a “certificate of merit” from both an attorney and a licensed mental health professional before a defendant can be served.⁶ Whether that safeguard worked as intended is now central to the fraud dispute.

Why Payments Are Frozen

On November 19, 2025, District Attorney Nathan Hochman announced a criminal investigation into potentially fraudulent AB 218 claims. His office is examining allegations that people were paid cash to have law firms file false abuse claims on their behalf, and is looking at potential misconduct by claimants, attorneys, recruiters, and medical professionals. The DA set up a fraud hotline and offered a limited form of immunity to non-lawyer claimants who came forward.⁷

In a letter dated January 9, 2026, Hochman asked the county to pause payouts for at least six months to prevent what he called 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 distributions to individual claimants.⁸

By June 2026, Hochman escalated. In a court filing, he asserted 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. No criminal charges, arrests, or indictments of attorneys, recruiters, or claimants had resulted from the investigation as of mid-June 2026.⁹

Plaintiffs’ attorneys pushed back. Patrick McNicholas, who represents roughly 1,000 clients, argued that because the settlement is structured to pay out over five years, the DA has time to investigate without freezing payments. Survivors have said the loss of records for decades-old cases makes it nearly impossible to defend their claims against blanket accusations.⁹

The Firm at the Center of the Inquiry

Much of the fraud scrutiny has focused on the Downtown LA Law Group, known as DTLA, which represents about 2,700 claimants — close to a quarter of all victims in the $4 billion settlement. The firm, founded in 2013 by cousins Farid Yaghoubtil and Daniel Azizi with Salar Hendizadeh, is now the subject of overlapping investigations by the DA’s office, the LA County Counsel, and the State Bar of California.¹⁰

Allegations against DTLA include the use of third-party recruiters to sign up clients and the filing of fabricated 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.¹¹

On June 1, 2026, the State Bar charged three DTLA 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.¹²

DTLA denied wrongdoing, stating it “categorically does not engage in, nor has it ever condoned, the exchange of money for client retention,” and moved to block the State Bar’s review of its client records.¹² Under both settlements, DTLA claims now face an additional layer of scrutiny, including possible interviews and requests for extra evidence, with screening costs paid by the firm.⁵

Where the Court Stands

Superior Court Judge Lawrence Riff oversees the bulk of the settlement cases. At a hearing on June 15, 2026, Riff acknowledged the tension between protecting legitimate survivors and addressing the fraud allegations, asking aloud, “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 and other key figures had been largely kept in the dark about the specifics of the DA’s investigation: “We don’t really know what he has.” Riff ordered lawyers to halt all payments until a follow-up hearing set for June 25, 2026.²

The county previously appointed two Superior Court judges to review claims for fraud. The DA has argued his office’s vetting is “far superior” to those efforts.² An attorney for the county has noted that only a judge has legal authority to officially stop settlement payments, so the DA’s requests carry weight but are not self-executing.¹³

A Second Settlement and a Rising Claim Count

The $4 billion agreement is not the only deal on the table. By autumn 2025, claims against the county 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 were not part of the original deal. Three firms — Manly, Stewart & Finaldi; Arias Sanguinetti Wang & Team; and Panish Shea Ravipudi — had negotiated separately for their clients, and the result was an average per-claimant figure of roughly $2 million.⁵

By that point, the county faced over 14,000 total claims when accounting for both settlements and an additional 2,500 pending lawsuits, with the number still expected to rise. No other California county or state entity has faced litigation on anything approaching this scale.¹⁴¹⁵

What This Means for Survivors Waiting on Payment

The roughly $396.4 million already deposited into the settlement trust sits there. Payments to individual claimants are on hold pending Judge Riff’s next ruling and the direction of the DA’s investigation.⁸

Attorneys for survivors have warned that the delay is compounding the harm. Many claimants are elderly or in poor health. Some, their lawyers say, will die before they see a dollar. Even without the freeze, the settlement was designed to pay out over years, with county-wide obligations stretching to fiscal year 2050–51 and funded partly through judgment obligation bonds, a form of taxable municipal debt used to amortize tort liabilities.³¹⁶

The outcome of Judge Riff’s upcoming hearings and the DA’s investigation will determine whether the settlement can move forward as approved, whether payouts resume in phases with heightened vetting, or whether the deal faces a longer unraveling.

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