Pastor Arnold heard this legend from high school friends (in Fullerton). There is an actual house that is associated with this legend and he has passed by it several times.
Quoted from Pastor Arnold
There was a track called Laguna Niguel in Fullerton. It was an affluent place where a lot of upper class people lived. There was a married couple that had a disabled child. The child lived in a wheelchair all his life. The child was unpopular, didnt have friends. In an effort to get the child more friends, the parents threw their child a large birthday party and invited many people from school.
All the kids came to the party, but they ignored the kid. The child was despondent and left the party. He rolled in his wheelchair out near the lake and accidentally fell in and drowned. So, the parents blamed the kids that came. The parents, who were filled with anger, made cardboard cutouts of all the kids who came and posted them in the windows.
This particular urban legend sounds a lot like the plot of several recent movies / shows in which an unpopular child dies or is killed and the blame falls upon the normal / popular children. Recently, there was an episode of the popular series Smallville in which there is a flashback to Lex Luthors childhood. The flashback eventually shows Lex Luthor savagely beating his uncool friend for wanting to tattle on three popular students and ruin Lexs chances of becoming part of the in crowd. Again, the episode uses the common theme of an unpopular child (although Lexs friend does not have any physical handicap) who dies at the hands of the popular kids.