Cashing in on California’s $4B sexual abuse settlements

A once-solemn legal reckoning over decades of childhood sexual abuse in Los Angeles County is turning into a bizarre gold rush, with Wall Street vultures are circling.

In the months since Los Angeles County agreed to a staggering $4 billion settlement resolving almost 7,000 sexual abuse claims tied to county-run juvenile detention and foster care facilities dating back decades — the largest such payout in U.S. history — an unexpected class of players has emerged: private investors betting on legal claims.

Since the historic settlement was announced in April, LA airwaves have seen a surge in marketing from law firms looking to bring on old victims as new clients in the name of justice. Now, more than 11,000 people have filed similar claims. To local officials, it looks predatory.

According to a Los Angeles Times investigation, law firms handling sex abuse cases have accepted backing from private money, sometimes routed through secretive Delaware entities, that stand to profit handsomely if future settlements or verdicts pay off.

A once-solemn legal reckoning over decades of childhood sexual abuse in Los Angeles County is turning into a bizarre gold rush–and Wall Street vultures are circling.

Records reviewed by The Times show that some of the powerhouse law firms leading the charge are being bankrolled by “opaque out-of-state companies” who provide the upfront cash for massive marketing pushes and legal fees in exchange for a cut of the final payout.

“I’m getting calls from the East Coast asking me if people should invest in bankrupting L.A. County,” Supervisor Kathryn Barger told the LA Times. “I understand people want to make money, but I feel like this is so predatory.”

One of the firms plastering Los Angeles TV and social media feeds with ads recruiting supposed victims, the Sheldon Law Group, is reportedly funded this way says the LA Times. The firm has reportedly identified some 2,500 “potential clients.”

Los Angeles County District Attorney Nathan Hochman speaks outside of the courthouse in Los Angeles, April 17, 2025. AP

“We act in the best interests of our clients, who are victims in every sense of the word and have suffered real and quite dreadful injuries,” a spokesperson for Sheldon Law Group said in a statement. “Without financial and legal support, these victims would be unable to hold the responsible parties, powerful corporate or governmental defendants, accountable.”

The lawsuits stem from a California law, AB 218, which temporarily lifted the statute of limitations on childhood sexual-abuse claims, prompting a flood of suits from incidents dating back decades.

In November, L.A. County District Attorney Nathan Hochman has launched a probe into allegations of rampant fraud within the $4 billion settlement. The investigation follows reports that some plaintiffs were allegedly paid to sue–criminal conduct that effectively steals from both victims and taxpayers. “My Office unequivocally stands with survivors, not greedy opportunists who profit from others’ pain,” Hochman said.