LA County DA Uncovers Fraud in Child Sex Abuse Settlement Claims

Two people have been charged with grand theft and conspiracy after authorities say they attempted to defraud the Los Angeles County’s child abuse victim compensation fund by submitting dozens of false claims, District Attorney George Gascón announced Wednesday.

The suspects, identified as Olivia Rios, 38, and Malik Bailey, 33, allegedly submitted 41 fraudulent claims to the county’s $2.5 billion victim settlement program established for survivors of child sexual abuse at juvenile halls and probation camps. According to prosecutors, the pair fabricated claims for people who were never in county custody or who had not experienced abuse while in detention.

“These individuals exploited a program designed to compensate victims who suffered unimaginable trauma,” Gascón said at a press conference. “Every fraudulent dollar diverted from this fund is stolen directly from survivors who deserve justice and healing.”

The settlement fund was created after decades of documented sexual abuse in Los Angeles County juvenile facilities came to light. Between the 1970s and early 2000s, hundreds of minors reported being sexually abused by staff members while in county custody. After years of litigation, the county established the compensation program in 2022 to provide financial redress to victims.

The fraud investigation began when county officials noticed irregularities in a series of claims submitted between March and August 2023. The suspicious applications contained similar language and formatting, raising red flags for administrators who then alerted the District Attorney’s Public Integrity Division.

Investigators discovered that Rios and Bailey had allegedly created a sophisticated scheme to identify potential claimants, coaching them to provide false information about abuse that never occurred. The pair reportedly promised to split settlement money with participants, taking a significant portion as a “fee” for their services.

“What makes this particularly egregious is that these individuals preyed on vulnerable community members, many with limited education or financial resources, convincing them to participate in fraud by promising easy money,” said Deputy District Attorney Max Huntsman, who leads the Public Integrity Division.

The county’s settlement program requires claimants to provide specific details about their detention, including dates, facilities, and descriptions of alleged abuse. Prosecutors say Rios and Bailey provided templates with fabricated information to ensure claims would be approved.

Had their scheme succeeded, authorities estimate the fraudulent claims would have resulted in approximately $6.3 million in undeserved payouts. The actual settlement amounts varied, with legitimate victims typically receiving between $75,000 and $850,000 depending on the nature and severity of abuse suffered.

Legal experts note that fraud cases targeting victim compensation programs are particularly damaging as they not only divert resources but can cast doubt on legitimate claims.

“When people commit fraud against victim funds, it creates additional barriers for real victims who already face significant challenges coming forward,” said Maria Ramirez, director of the National Center for Victims of Compensation Programs. “False claims make the verification process more stringent, which can inadvertently harm genuine survivors.”

County officials emphasize that the fraud detection does not reflect on legitimate claims, which continue to be processed and paid. The county has implemented additional verification measures but is working to ensure these do not create undue burdens for actual victims.

Rios and Bailey each face up to five years in prison if convicted on all charges. They were arrested Tuesday following a six-month investigation and are being held on $100,000 bail each. Their arraignment is scheduled for next week at the Clara Shortridge Foltz Criminal Justice Center in downtown Los Angeles.

The District Attorney’s Office urges anyone with information about additional fraudulent claims to contact their Public Integrity Division hotline.