LA DA alleges possible fraud, seeks stay of $4B abuse settlement

Los Angeles County District Attorney Nathan Hochman has asked a judge to temporarily halt payments from a $4 billion settlement, arguing that as many as 81% of the claims may be fraudulent and that distributing funds now could jeopardize an ongoing criminal investigation.

The investigation includes potential misconduct by "plaintiffs as well as third parties including but not limited to their attorneys, recruiters, and medical professionals," Hochman said in the memorandum accompanying an ex parte application filed Thursday.

The motion seeks a six-month stay of all payments from the settlement, which was approved by the Los Angeles County Board of Supervisors last year to resolve more than 11,000 claims by people alleging sexual abuse while housed in county juvenile facilities.

Several firms informed the District Attorney's Office they oppose the motion, while others advised that they support the requested stay.

In the ex parte application - which Hochman signed personally, along with a supporting declaration and memorandum of points and authorities - the district attorney seeks permission to intervene in the coordinated juvenile camp sexual abuse litigation known as Group A and stay all settlement distributions until Dec. 31. Jane BP1-B Doe et al. v. Doe 1 et al., lead case No. 22STCV25961.

To support intervention, the District Attorney relies on Code of Civil Procedure Section 387, arguing that no existing party in the litigation adequately represents the interests of the criminal investigation and that settlement distributions may impair the office's ability to protect those interests.

A hearing was set for Monday morning in Los Angeles County Superior Court before Civil Department Supervising Judge Lawrence Riff, who approved the mechanisms, framework and trustee to distribute the multibillion-dollar fund to claimants last October after the board of supervisors approved the settlement.

Hochman's request for a stay does not affect other lawsuits filed over similar accusations in other county facilities such as an $828 million agreement regarding abuse in juvenile halls and probation facilities where payments to the 400 claimants are expected to be complete by the end of the year.

Attorneys John C. Manly, Mike Arias and Spencer Lucas, who represented plaintiffs that separate juvenile facilities abuse settlement and were not part of the $4 billion Group A agreement, said they deliberately steered clear of the larger deal, citing limited discovery, lower recoveries for individual plaintiffs and warning signs that are now drawing investigations into questionable claims.

"The ex parte application is focused on the Group A cases given the DA's ongoing investigation of fraud in those matters. This sheds further light on precisely why our group made the decision early on to separate ourselves and pursue a path of justice for our limited number of cases," Lucas of Panish | Shea | Ravipudi LLP commented in an email Friday.

"I think there's a piece of the story the DA is missing," Manly, a founder of Manly, Stewart & Finaldi, said in a phone interview Friday. "I'm all for the DA investigating this, but it's not news. The idea there was fraud in these cases was brought to the court's attention, and Judge Riff was asking questions about it six months before the settlement was approved without a single deposition.

"The bottom line is that Judge Riff understands what happened here. But the question is: If I knew that and the Panish firm and the Arias firm knew that and I was saying it in front of the court, why did the county settle?"

According to transcripts of hearings held in May and June 2025 before the three judges presiding over the different litigation groups, Riff questioned whether the county and settling plaintiffs in the Group A camps case were moving too quickly toward a global settlement.

He was particularly skeptical of discovery demands aimed at inactive plaintiffs, suggesting they appeared designed less to gather information than to dismiss claims, raising concerns about fairness and proper civil procedure under rules the Legislature had set.

During a June 2025 hearing over settlement procedures and Certificates of Merit, Manly argued that attorneys should be willing to vouch for the legitimacy of their clients' claims, stating: "A lawyer who files a case here against a public entity -- if you file a false claim, it's a felony. We all know it. You ought to be able to step up and say, 'Yeah, this is my client, and I believe they were abused,' under oath."

Representing the county at that hearing, Baum said he largely agreed with Manly's concerns but added, "We had a gun to our head, figuratively, so to speak," because of the pressure to complete a global settlement involving thousands of claims in a limited amount of time. Baum said officials ultimately chose what they viewed as "the least bad of a series of bad choices" in order to "save and salvage" a settlement they believed benefited claimants, the county and the courts.

In August 2025, Manly wrote to U.S. Attorney Bilal Essayli asking him to investigate the county's process as well as why so few prosecutions of perpetrators had taken place despite the thousands of claims being paid.

Court papers reveal that earlier this year Hochman asked Los Angeles County to voluntarily pause settlement payments for six months while prosecutors conducted a preliminary review. The county agreed.

According to the filing, the District Attorney's Office has spent months conducting a criminal investigation into allegations that a significant number of claims submitted under Assembly Bill 218 are fraudulent. The new law allowed childhood sexual abuse claims to be litigated decades later.

Hochman said in a May 21 letter to county attorney Andrew Baum of Glaser Weil, investigators had completed the first phase of the review, which involved collecting and analyzing information from county records and multiple government databases through a data collection system developed by the District Attorney's Office.

"Based on this preliminary investigation, we believe the percentage of fraudulent claims may be as high as 81 percent," Hochman wrote.

According to the memorandum, prosecutors are now entering what they describe as an intermediate phase of the investigation, during which collected data will be analyzed, compared and interpreted. The filing states that investigators expect additional allegedly fraudulent claims to be identified as the review continues.

The District Attorney's Office told the court it has not yet received complete information for all claimants, particularly those who allege abuse while under the supervision of Dependency Court. Prosecutors said they have encouraged plaintiffs' attorneys to provide court records supporting those claims.

Hochman told the court that plaintiffs' lead counsel have been told they can expedite review of their clients' claims by providing all court documentation, extrinsic documentation and full identifying information for their clients, which will expedite the intermediate phase of its investigation - identifying which claimants were and were not housed at the location where they claim they were abused.

Hochman's filing said that as of Wednesday morning, the following law firms opposed his application: Abir Cohen Treyzon Salo LLP, Becker Law Group, Clarkson Law Firm P.C., D. Miller & Associates PLLC, McNicholas & McNicholas LLP, Peiffer Wolf Carr Kane Conway & Wise, Slater Slater Schulman LLP, The Lewis Farmer Law Group, and Waters Kraus Paul & Siegel.

These firms, he said, concur with application: Aylstock, Witkin, Kreis, & Overholtz PLC, Bana Legal Group, Carillo Law Firm LLP, El Dabe Ritter Trial Lawyers, Engstrom, Lipscomb & Lack, Gould Grieco & Hensley, Jason J. Joy & Associates, Law Offices of Lee Paul Hallada, Manly, Stewart & Finaldi.

A central argument in the filing is that the District Attorney's Office possesses investigative resources unavailable to other entities involved in evaluating claims.

The memorandum states that prior vetting efforts conducted before the settlement and through ongoing judicial review were insufficient to identify all potentially fraudulent claims and that prosecutors have access to databases and investigative tools not available to other agencies.

Hochman argues that paying claims before the investigation is completed could reduce compensation available to legitimate abuse survivors.

"Since there is a finite amount of money available to settle all the claims, every fraudulent claim that receives a dollar (or more likely hundreds of thousands of dollars) means that legitimate claims from child abuse survivors will receive less of a payout," Hochman wrote in his letter to Baum.

The filing also contends that distributing settlement funds now could hamper the criminal investigation by making witnesses less cooperative, obscuring financial trails and increasing the difficulty of recovering money allegedly obtained through fraud.

"I have no comment on what level of fraud may exist," Arias, of Arias Sanguinetti Wang & Team, LLP, commented in a text Friday. "But any efforts to weed out any fraudulent claims is to the benefit of the remaining legitimate and deserving survivors. This is what happens when firms that are not experienced in this area of law don't stay in their lane and when the goal is quantity not trial worthiness of a case."