From ABC News:
Wilson Reyes, a student at Public School 114 in the Bronx reportedly got into a fight with a fellow student in December after he was accused of taking $5 of lunch money that had fallen on the ground in front of him. Responding to a complaint of assault and robbery, the police were called and took the boy to the local police precinct where officers allegedly handcuffed and interrogated him for ten hours, according to the lawsuit.
NYPD says the lawsuit is exaggerated. The amount of money sought–$250 million–seems to be.