Victims of historic sexual abuse within Los Angeles County institutions are facing a new challenge: companies offering to buy their anticipated settlement payouts for a quick, upfront lump sum. These offers arrive as many claimants are stuck in limbo, with their long-awaited payments delayed by fraud investigations and audits.
The L.A. County settlement, valued at $4 billion, aims to compensate thousands of individuals who experienced abuse in county-run juvenile halls and other facilities, often decades ago. The influx of lawsuits followed a change in state law, Assembly Bill 218, which allowed people to sue over past abuses. While some victims have begun receiving their first payments this fall, payouts for two law firms representing roughly half of the claimants are currently paused pending various probes, leaving many in a difficult financial position.
For some, the offers from finance companies have been startlingly personal. One man, who wishes to remain anonymous, filed his lawsuit under a pseudonym, assuming only his legal team and family knew the details. He was bewildered to receive a cold call from a Florida company this fall, offering a deal for his future installments. “I’m really curious, like, how you got my number?” he asked on a recorded call. “This is a very confidential matter.” He never received an answer, though the salesperson offered him a $200 referral fee if he found others to sell their payouts.
James Turpin, another claimant, described the firms as “circling like sharks in the water” after a representative messaged him on Facebook. Krista Hubbard texted a salesperson from a Miami Lakes, Fla., company, asking about how they obtained her information, and received the response: “Have a nice day.”
Many victims report feeling desperate to secure whatever money they can and move forward with their lives. Deborah Isom Smith, who sold her payout stemming from a claim related to MacLaren Hall, a former county-run children's shelter notorious for abuse, simply stated, “I just want to go live my life.” Neffertashia Burroughs, who was abused in a juvenile hall, wrote that she is facing eviction and struggles to feed her children, stating, “I am exhausted.” A Gardena man, facing chronic kidney disease and needing immediate treatment, agreed to sell a portion of his payout due to urgent medical needs. While an initial contract showed a significant discount, an attorney for the funding company, Datura Capital, later indicated it was a mistake and the man would receive about 72% of his payout.
These funding companies generally offer a lump sum equivalent to about 80% of the amount a victim is selling, though some transactions fare worse. Frederick Love, chief legal officer for LA Settlement Funding, one of the companies involved, said their transactions are “priced as tightly as possible to provide maximum benefit to sellers.” He indicated discount rates typically range from 9% to 11% and confirmed his company only buys the victim's portion, with any excess payments going back to the plaintiff. Liberty Settlement Funding posted on a Facebook group for MacLaren Hall victims, stating, “No pressure at all — just here to help.”
According to Ray Boucher, one of the lead plaintiff attorneys coordinating these cases, more than 180 victims across the country have already moved to sell their payouts to approximately a dozen different companies. In California, a judge must approve such sales, determining if they are in the claimant's best interest. Court filings detail reasons like impending homelessness, college tuition, or critical medical needs.
However, some legal representatives are concerned about the terms. Boris Treyzon, a partner at ACTS Law, which represents roughly 1,700 plaintiffs, has appeared in court to urge judges to reject certain sales, stating, “The interest rates are insane.” Lawyers also point to unanswered questions in contracts, such as who is responsible for attorney fees, which can take up about 40% of payouts, or what happens if a victim receives more money than initially anticipated.
L.A. County officials are not pleased. A county spokesperson called the finance firms “aggressive finance firms exploiting vulnerable AB 218 victims” and another “failure of the system.” The county stated that the “siphoning of taxpayer dollars for profit” is “fundamentally against the original intent of AB 218.” Meanwhile, L.A. County Dist. Atty. Nathan Hochman has asked a judge to pause payouts for six months to investigate “significant” allegations of fraud within the settlement process, adding another layer of uncertainty for victims already struggling to heal and move on.
Caught between long delays, the re-opening of old wounds, and the urgent need for financial stability, many victims find themselves considering these offers, despite the high cost of a quick resolution.
