The man was sure only his lawyers and family knew about his lawsuit against Los Angeles County over sexual abuse he says he endured inside a juvenile hall as a teenager.
The case, filed under a pseudonym, was one of thousands resolved by county officials last year in a historic $4-billion sex abuse settlement. He asked to remain anonymous to discuss the abuse, which he said was among his most closely held secrets.
So he was bewildered this fall to receive a phone call from a company in Florida that seemed to know all about it.
The unwanted cold caller offered a deal: In exchange for a lump sum of cash up front, the company would collect his future payouts, which are set to come in installments over the next five years.
“I’m really curious, like, how you got my number?” said the man, according to a recording of the call reviewed by The Times. “This is a very confidential matter. There is no way that you should know my name, let alone my phone number.”
He says he never got an answer. Instead, the salesperson offered him a $200 referral fee if he could find others to sell their payouts, too.
Offers like these, victims suing L.A. County say, have become inescapable. Over Facebook messages and cold calls, private companies are offering lump sums to victims who are willing to sign over the rights to their anticipated settlement money, sometimes sacrificing a significant chunk of the payout in the process.
“They’re circling like sharks in the water,” said James Turpin, another claimant in the settlement, who said a representative from a funding company messaged him on Facebook.
Many involved say they’re desperate to get whatever money they can and move ahead with their lives as the case has gotten bogged down by delays and fraud allegations. While some victims are getting their first payments this fall, two law firms behind the bulk of the claims in the settlement have had their payouts paused pending probes, leaving thousands in limbo.
“It’s been too long and I’m tired of reliving that over and over again,” said Deborah Isom Smith, who sold her payout stemming from her claim related to MacLaren Hall, a former county-run children’s shelter notorious for abuse. “I just want to go live my life.”
The funding companies are standing by to assist.
“Hi all, I know waiting on your LA settlement money is tough,” wrote a representative from Liberty Settlement Funding on a Facebook group for victims of MacLaren Hall. “No pressure at all — just here to help.”
Over the last few months, more than 180 victims across the country have moved to sell their payouts to about a dozen different companies, according to Ray Boucher, one of the lead plaintiff attorneys coordinating the cases.
Frederick Love, chief legal officer for LA Settlement Funding, which has bought many of the payouts, said their transactions were “priced as tightly as possible to provide the maximum benefit to the sellers.” He said the discount rates range from 9% to 11%.
Most victims will get a lump sum equivalent to about 80% of the amount they’re selling, according to court filings, while some are poised to fare far worse.
One Gardena man signed a contract to sell $90,400 of his payout for $25,000, according to court filings. An attorney representing the funding company, Datura Capital, said the rate was a mistake, and the man will get about 72% of his payout at the corrected rate.
“I am not doing this lightly and there is an urgent need for doing so,” the man wrote in an Aug. 26 declaration. “I was told by the doctors that I have chronic kidney disease and need treatment right away. I don’t have the funds for this otherwise.”
In California, a judge needs to approve the sale of a settlement payout after finding it in the best interest of the claimant. The filings typically detail various reasons the victims need the money now: looming homelessness, college tuition, a down payment on a house.
Boris Treyzon, a partner at ACTS Law, which represents about 1,700 plaintiffs, said he’s appeared in court recently to urge a judge to reject a sale.
“The interest rates are insane,” Treyzon said.
Lawyers representing plaintiffs in these cases say the contracts leave critical questions unanswered, including who is responsible for paying attorney fees — which typically gobble up about 40% of the payouts in these cases — and what happens if a victim ends up getting more money than anticipated in the initial deal.
Love, of LA Settlement Funding, said his company is only buying the victims’ portion of the settlement and said “any payments that are in excess of that being assigned” will go back to the plaintiff.
A spokesperson for L.A. County said in a statement that the the loan companies are the latest example of third parties chipping away at funds set aside to compensate victims of sexual abuse. The county faced the deluge of lawsuits after a change in state law, known as AB 218, allowed people to sue over abuse that took place decades ago.
“Aggressive finance firms exploiting vulnerable AB 218 victims for a payday now scheme is yet another failure of the system to put appropriate guardrails on the ever-ballooning problem facing California public entities,” the county said in a statement. “The ongoing siphoning of taxpayer dollars for profit, whether from plaintiff attorneys who are taking up to 50% of a victim’s settlement or settlement firms offering fast payment for a fee, is fundamentally against the original intent of AB 218.”
Neffertashia Burroughs, who said she was abused in a juvenile hall as a teenager, said she isn’t happy with the deal, but doesn’t see another option. Like many victims, she said the case has opened up old wounds and she’s tired of the timeline for payment shifting seemingly every month.
She’s on the brink of eviction, she said, and sometimes does not have enough to feed her children.
“I am struggling to heal myself while remaining trapped in a system that seems to consist of delays, uncertainty, and repeated excuses,” she wrote in an email. “I am exhausted.”
Others say they feel the rates are decent, but are perturbed by the flood of calls from companies who won’t explain how they got their contact information. Nearly all the sex abuse lawsuits are filed under pseudonyms.
“So help me understand how you guys got my information,” Krista Hubbard texted a salesperson with a funding company based in Miami Lakes, Fla. “If I need to, I will have your company audited if I cannot get an answer.”
“Have a nice day,” the salesperson responded.
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