The cardinal was accused of transferring priests who molested children to other parishes rather than removing them from the priesthood and alerting authorities.
One priest, Michael Stephen Baker, told Mahony in 1986 that he had molested children, but he was allowed to remain in active ministry. Mahony sent Baker to a treatment center in New Mexico and later reassigned him to other parishes, where he allegedly victimized children.
Prosecutors later filed criminal charges against Baker. He pleaded guilty to molesting two boys and was sentenced in 2007 to more than 10 years in prison.
Mahony also came under fire for vigorously fighting attempts by prosecutors, victims and the victims' attorneys to gain access to the church's personnel files, which tracked the problems of accused priests and the church hierarchy's reaction to them.
Mahony argued that the records should remain confidential, but Los Angeles County Dist. Atty. Steve Cooley accused the archdiocese of engaging in a "pattern of obstruction." Mahony was eventually ordered by the courts to turn the files over to prosecutors.
The district attorney's office launched a grand jury investigation into the archdiocese several years ago, but no charges were filed. District attorney's spokeswoman Sandi Gibbons said Wednesday that prosecutors are continuing to look at documents from the archdiocese for evidence of molestation by priests and former priests but that charges against Mahony are "highly doubtful."
Two years ago, the archdiocese agreed to pay $660 million to 508 people who accused priests of sexual abuse. The payout was the largest settlement in a scandal that has involved an estimated 5,000 priests nationwide and cost the Roman Catholic Church more than $2 billion to resolve cases in this country alone.
David Clohessy, national director of the Survivors Network of Those Abused by Priests, said he had not heard about the latest investigation but welcomed the new scrutiny of Mahony.
"It is long, long overdue," Clohessy said. "It is just crucial that the hierarchy face criminal charges, because almost every other conceivable means have been tried to bring reform."
Legal experts said the theory that prosecutors are pursuing is usually reserved for cases against public officials, such as politicians and law enforcement officers, and corporate executives accused of wrongdoing.