LAUSD Rocked By Another Massive Corruption Scandal: Two Charged in $22 Million Pay-to-Play Money Laundering Scheme

In what prosecutors are calling one of the largest money laundering scandals in the history of the Los Angeles Unified School District (LAUSD), a former technical project manager and the owner of a Texas-based technology company have been charged in a brazen pay-to-play scheme that funneled more than $22 million in taxpayer-funded contracts to a single vendor — with millions allegedly kicked back to the insider.

According to the Los Angeles County District Attorney’s Office, Hong “Grace” Peng, 53, of Pasadena, who served as a technical project manager for LAUSD, illegally steered millions in contracts to Innive, a tech firm based in Flower Mound, Texas, for work on the district’s My Integrated Student Information System (MiSiS) between 2018 and 2022. Innive’s owner, Gautham Sampath, 53, is accused of laundering more than $3 million of those funds and routing them back to Peng through intermediaries. 

A search warrant executed in 2022 at Peng’s Pasadena home and LAUSD workplace prompted her resignation from the district. She now faces felony charges of money laundering and having a financial interest in a contract made in her official capacity. Sampath faces the same money laundering and financial interest charges, plus aiding and abetting a government official. Both could face up to seven years in state prison if convicted. Warrants have been issued for Peng’s arrest and Sampath’s extradition. 

LA County DA Nathan J. Hochman didn’t mince words: “This case involves a blatant abuse of public trust — funneling taxpayer dollars intended for students into personal coffers. This vendor, working with an LAUSD project manager, allegedly carried out a multi-year, multi-contract pay-to-play arrangement that siphoned millions of dollars from our schools. We will not tolerate public officials who sell out their responsibilities or contractors who line their pockets by gaming the system.” 

This latest scandal lands just weeks after the FBI executed search warrants at LAUSD headquarters in downtown Los Angeles, Superintendent Alberto Carvalho’s San Pedro home, and a property in Florida linked to him — an investigation the California Globe first reported on March 15. 

As the Globe has documented, LAUSD continues to drown in scandal and waste even as enrollment plummets and academic outcomes lag. Just days after the FBI raids, district officials quietly approved borrowing another $250 million in “judgment obligation bonds” to settle sexual misconduct claims. Meanwhile, teachers and parents have filed complaints alleging retaliation by district officials, further eroding trust in an institution already under fire. 

While LAUSD’s own data shows attendance has collapsed and per-pupil spending has skyrocketed on bureaucracy and lavish projects rather than classroom instruction, insiders and connected vendors continue to enrich themselves at the expense of the very students the district claims to serve. 

DA Hochman’s office is urging anyone who has done business with Innive to come forward with information: “If your organization has entered into any contracts with Innive, please contact the Public Integrity Division at (213) 257-2475 or submit information through our online form at https://da.lacounty.gov/contact/email.”