LA United School District scandal leads to charges as $22M scheme allegedly drained funds meant for students

A former employee of the Los Angeles Unified School District’s IT department and the proprietor of a tech company are now facing serious criminal charges. Prosecutors have labeled this case as one of the “largest” suspected money laundering operations ever seen in the district’s history.

Hong “Grace” Peng, who formerly served as a technical project manager for LAUSD, alongside Gautham Sampath, the owner of the technology company Innive, are accused of masterminding a prolonged “pay-to-play” scheme. This operation allegedly funneled over $22 million in school district contracts into Sampath’s enterprise.

“This situation is a glaring example of public trust being exploited — diverting taxpayer funds meant for students into private pockets,” stated Los Angeles County District Attorney Nathan Hochman. “This vendor, in collaboration with an LAUSD project manager, is alleged to have conducted a multi-year, multi-contract pay-to-play scheme that drained millions from our educational institutions.”

FBI Conducts Search At Los Angeles Unified School District Offices

The headquarters of the Los Angeles Unified School District (LAUSD) is located in downtown Los Angeles. (Photo by Justin Sullivan/Getty Images)

Prosecutors claim that Peng was instrumental in assigning contracts related to the district’s My Integrated Student Information System (MiSiS) from 2018 to 2022.

Authorities assert that these contracts, amounting to $22 million, predominantly favored Innive.

Investigators say Sampath then funneled more than $3 million back to Peng through intermediaries.

Prosecutors say messages between the two show discussions about deleting chats, securing contracts and moving money.

Peng, a Pasadena resident, is charged with felony counts of money laundering and illegally holding a financial interest in government contracts.

Sampath, of Flower Mound, Texas, faces similar charges, along with an additional count of aiding and abetting a public official.

An arrest warrant has been issued for Peng, while Sampath faces extradition to California. Court dates have not yet been set.

Peng resigned from LAUSD in late 2022 after investigators executed search warrants at her home and workplace. 

Authorities say Sampath and his company continue to hold government contracts in California and nationwide.

If convicted, both defendants could face up to seven years in county jail.

LA DA Nathan Hochman talks about the Rob Reiner stabbing case

Los Angeles County District Attorney Nathan Hochman called the case “a blatant abuse of public trust.” (Derek Shook for Fox News Digital)

“We will not tolerate public officials who sell out their responsibilities or contractors who line their pockets by gaming the system,” Hochman added. “Both will be held fully accountable.”

In a statement, LAUSD said it was aware of the charges against Peng.

“LAUSD is committed to full compliance with all applicable laws, and we expect our employees and business partners to comply with the highest standards of ethics and integrity,” the school district said in a statement. “The District will continue to cooperate fully with relevant authorities.”

Innive did not immediately respond to Fox News Digital’s request for comment.

You May Also Like

Parents of Sheridan Gorman endorse Mike Lawler in new TV ad

Sheridan Gorman’s Parents Endorse Mike Lawler in New TV Ad

The parents of Sheridan Gorman, the Westchester college student allegedly killed by…
Nithya Raman defends 'genocide' stance rattleing Jewish crowd

Los Angeles City Councilmember Nithya Raman Defends ‘Genocide’ Stance Amid Jewish Crowd Backlash

Nithya Raman confronted one of the most contentious issues of her mayoral…
Loaded gun found toddler's backpack Michigan daycare

Loaded Gun Found in Toddler’s Backpack at Michigan Daycare

A Michigan daycare was thrown into chaos Monday after a toddler reportedly…
California colleges could drop English test for international students

California Colleges Could Drop English Tests for International Students

The California State University system is weighing changes to its English-language testing…
Violent pair pistol-whips man, steals luxury watch, cash outside NYC bar: cops

Police: Pair Pistol-Whip Man, Steal Luxury Watch Outside NYC Bar

Two attackers allegedly struck a man in the head with a gun…
Lindsay Clancy lawyer raises explosive doubt over who killed her children

Lindsay Clancy’s Lawyer Raises Doubts Over Her Children’s Deaths

PLYMOUTH, Mass. — Lindsay Clancy’s defense attorney appeared to take a new…
Man found dead on tracks at Brooklyn subway station after his bag reportedly got stuck in closing doors

Man Dies on Brooklyn Subway Tracks After Bag Gets Caught in Doors

A 57-year-old man died in Brooklyn on Monday evening after his bag…
Ohio woman sues hospital after surgeon allegedly amputated wrong leg

Ohio Woman Sues Hospital Over Alleged Wrong-Leg Amputation

An Ohio woman battling cancer became a double amputee after a surgeon…
Sheriff's department aware of possible new ransom note in Nancy Guthrie kidnapping case

Sheriff Aware of Possible Ransom Note in Nancy Guthrie Kidnapping

Alleged new ransom notes released in Nancy Guthrie investigation The disappearance of…
Caleb Flynn, former "American Idol" contestant and pastor, found guilty in wife's murder

American Idol Alum, Pastor Caleb Flynn Found Guilty of Wife’s Murder

Caleb Flynn, a former “American Idol” contestant and pastor, has been convicted…
Hurricane Polo's remnants bringing more rains to flood-struck US Southwest

Hurricane Polo Remnants Bring More Rain to Flood-Hit US Southwest

After striking Mexico, Polo weakened as it moved east, sending inches of…
Nor'easter leaves Rockaway Beach looking like steep cliffs of Ireland

Nor’easter Leaves Rockaway Beach Resembling Ireland’s Cliffs

This weekend’s deadly nor’easter stripped away massive sections of the Rockaway shoreline,…