Earlier, Díaz was seen at a party for Eleanor Delgadillo Coronado where he left afterwards with two friends, Luis "Cito" Vargas and Andrew Torres.

However, the Los Angeles Police Department (LAPD) was quick to arrest seventeen Mexican-American youths – Jack Melendez, Victor Thompson, Angel Padilla, John Y. Matuz, Ysmael Parra (Smiles), Henry Leyvas, Gus Zamora, Manuel Reyes, Robert Telles, Manuel Delgado, Jose Ruiz (Chepe), Victor Segobia, and Henry Ynostroza[2] – as suspects.

Its name came from the popular song "Sleepy Lagoon", which was recorded in 1942 by big band leader and trumpeter Harry James.

In February 1942, the U.S. government interned Japanese Americans from the West Coast, after classifying them as security threats following the United States' entry into World War II.

The rapid influx of laborers from Mexico and defense workers of ethnic backgrounds from all across the country into Los Angeles heightened racial tensions in the city.

A grand jury, headed by E. Duran Ayres, was appointed by the Los Angeles City Council to investigate an alleged "Mexican crime wave".

The autopsy revealed that Díaz was intoxicated and had blunt head trauma as well as multiple stab wounds, but ultimately they could not determine a cause of death.

[11] Despite the unclear cause of death, 20-year-old Henry Leyvas and 24 members of what the media termed "the 38th Street gang" were arrested for allegedly murdering Díaz.

[12] On August 10, police conducted a roundup of 600 Latinos who were charged with suspicion of assault, armed robbery, and related offenses; 175 were eventually held for various crimes.

[8] Due to this round-up of "Zoot Suiters", many families in the community began putting curfews in place to protect those that they cared about from the increasing police presence.

Several of the accused challenged these convictions on the basis that they were racially motivated due to media portrayal of not only the defendants, but all people of color and Latinos as criminals.

[8] Judge Fricke also permitted the chief of the Foreign Relations Bureau of the Los Angeles Sheriff's office, E. Duran Ayres, to testify as an "expert witness" that Mexicans as a community had a "blood-thirst" and a "biological predisposition" to crime and killing, citing the culture of human sacrifice practiced by their Aztec ancestors.

[17] Some SLDC members included: Alice McGrath, Josefina Fierro de Bright, Josefa Fierro, Maria Alvez, Luisa Moreno, Dorothy Healey, LaRue McCormick, Lupe Leyvas, Henry Leyvas, Doc Johnson, Frank Lopez, Bert Corona, and Gray Bemis.

The Mexican American community was outraged and several attorneys challenged Judge Fricke's decisions: George Shibley, Robert Kenny, Clore Ware, Ben Margolis, John McTernan, Carey McWilliams, and several others.

There was a lack of evidence to convict the defendants to begin with and it was Diaz's autopsy report that showed that he was highly inebriated and received trauma to the head, which likely could have been caused by his own doing.