This is a double criminal admission of guilt (triple if that payment can be proven), and probably said foster mom will repeat what she's done to the police, if prompted. If that person or the son decides to go the police and the foster mom or "the kid" repeats that, there is no coming back from that in court. And if there is even a tangential case to be made that it was an assault, may result in a year's incarceration for the kid, minimum (and punishment for the foster mom too, if the police really wants to). Can be over 10 years incarceration. In other words, exposing yourself like that can, quite literally, end their childhood entirely. Don't do that.

This is what we've been taught is the right thing to do, it's moral, but, crucially, it's not lawful. A CPS kid may very well see the whole world as their enemy and therefore it is a near-guarantee that some people are out to get these kids. If you do this against someone like that, the kids' life is destroyed. As soon as this gets told to the police there is nothing a lawyer or even their youth worker can do to rectify the situation from that point on. From that point it makes zero sense to try to rectify the situation with the victim, it can only makes things worse, it cannot make anything better. This is criminal law, the victim has no rights. Only the judge and public prosecutor have any influence on the situation from that point forward.

You should NOT do this, for that reason. I get that the result is going to be stimulating that behavior (problem is that incarcerating said kid is also stimulating that behavior, because the consequences are too great and take away the chance for a normal future, leaving fewer options, but always leaving the option of criminality).

Otherwise: https://youtu.be/d-7o9xYp7eE?t=2687

Note that letting the kid get away with it entirely DOES provide multiple options for that behavior to stop, and cannot be so easily defeated by so many people. He could see someone else get caught. It could be a phase. He could get beaten up by the next victim. He could choose to take responsibility for something (girlfriend, a kid, even a dog, or, even more extreme, his foster mom could get sick or in trouble and depend on him) and see this as an unacceptable risk, ... What I'm saying is that firstly, this choice isn't as wrong as it first appears, and second isn't nearly as vulnerable to so many people. Many people will not react positively to putting yourself in such an extreme vulnerable position and will exploit it. For money, for ego, for ... it doesn't matter. You cannot risk the criminal justice system for a kid, you just can't, it just isn't a moral choice. You have a kid, you unconditionally defend them against anyone. In private talk to them, yell if you must, but you unconditionally defend them everywhere.

I would also like to add that this "humane form of justice" will have almost opposite effects depending on the trust level between all involved parties. If that trust is lacking, no matter where exactly, the foster mom's behavior strongly stimulates criminal behavior by the foster kid, including against herself. Trust issues between foster mom and kid? This will backfire. Trust issues between foster mom and either victim? Will very likely backfire. Only if you have near-perfect trust between all parties (and let's not forget one party just used violence against another, so lacking trust is expected).