DA Criticized for Plans to Spend Settlement Money on Gang Program

Orange County District Attorney Tony Rackauckas is drawing criticism from business leaders, and legal concerns from county attorneys, for his proposal to use winnings from a consumer protection lawsuit to pay teachers to tutor at-risk youth involved in a gang prevention program.

Rackauckas wants to use money from a 2013 settlement with the Japanese carmaker Toyota over deaths and injuries stemming from unintended acceleration problems.

The settlement called for the DA’s office to get $8 million for prosecuting financial cases and $8 million for the DA’s gang reduction program, known as GRIP, which is aimed at preventing at-risk students from joining gangs by involving law enforcement, nonprofits, teachers, and parents.

In a recent letter to the county, the Orange County Business Council – a powerful force in local Republican politics – noted that the tutoring effort, which would cost approximately $460,000 this school year, is a worthy cause.

But, using the consumer protection money from the DA’s Toyota settlement is inappropriate and encourages “shakedown” lawsuits against businesses to fund government programs, wrote Lucy Dunn, the group’s president and CEO, in the Sept. 21 letter.

Dunn says the DA’s consumer protection suits are inappropriate given that other forms of accountability – such as federal regulators and private lawsuits – are already in place.

“So-called ‘voluntary settlements’ have the perception of ‘shakedown settlements’ especially when the funds from settlement are used for completely unrelated government programs than the basis of the lawsuit – in this case, consumer protection,” Dunn wrote.

“Cynically, one must ask: will another ‘contingency fee lawsuit’ need to be filed and ‘settled’ to continue [the DA gang reduction program’s] funding? Why can’t an appropriate, balanced government budget allocate funding for [the tutoring program]?” Dunn asked.

Dunn noted that a judge recently halted a DA’s lawsuit against drug companies for allegedly fraudulently marketing painkillers, with the drug companies successfully arguing that the federal Food and Drug Administration has sole jurisdiction over the matter.

(Click here to read Dunn’s letter.)

An advocate with a lawsuit reform group agreed with the business coalition.

“They start to use the legal settlements to pay for government programs, and then when that legal settlement money runs out, what do you do?” You look for more businesses to sue, said Maryann Maloney, regional director of California Citizens Against Lawsuit Abuse.

And there are questions as to whether the DA’s plan would be illegal.

Toyota settlement money would be used to pay the teachers. But a court order in that case specifically bans use of the funds “to pay for employees of the [GRIP] program partners,” including “school personnel.”

(Click here to read the court order and here for the DA’s proposal.)

Rackauckas’ staff have tried three times in recent weeks to get the proposal passed by county supervisors. But each time, they withdrew the item before the supervisors’ meetings, amid legal concerns from the County Counsel’s office.

In light of those concerns, supervisors’ Chairman Todd Spitzer said he’s not okay with using the settlement funds for the DA’s proposal. “I’m not comfortable approving something that appears to violate a court order,” Spitzer said.

Asked for county CEO Frank Kim’s thoughts, spokeswoman Jean Pasco replied that the county supports “using the settlement funds consistent with the language of the court order.”

The DA’s office declined to comment for this article, and its unclear whether Rackauckas plans to bring the item back at a future supervisors’ meeting.

You can contact Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.