Los Angeles taxpayers have been robbed of $22 million meant for students in what prosecutors are calling the largest kickback scheme in LAUSD history, exposing yet another case of corrupt bureaucrats lining their pockets while our children’s education suffers.
Story Snapshot
- Former LAUSD IT manager Hong “Grace” Peng and Texas tech firm owner Gautham Sampath charged with orchestrating $22 million pay-to-play scheme from 2018-2022
- Peng allegedly steered school district contracts to Innive in exchange for over $3 million in kickbacks funneled through shell companies
- Scheme involved the troubled MiSiS student data system that already failed catastrophically in 2014, contributing to a superintendent’s resignation
- Investigation began after someone involved in the scheme bragged about it at a professional conference, overheard by an LAUSD employee
Taxpayer Dollars Stolen While Students Go Without
Hong “Grace” Peng, a 56-year-old former LAUSD technical project manager earning $166,000 annually, allegedly directed $22 million in contracts to Innive, a Texas-based technology firm owned by Gautham Sampath. Los Angeles County District Attorney Nathan Hochman announced felony charges against both defendants on March 27, 2026, stating prosecutors will seek maximum penalties of up to seven years in jail. The scheme involved the My Integrated Student Information System, draining funds that should have supported over 400,000 students in the nation’s second-largest school district. Text messages reveal deliberate efforts to conceal the corrupt relationship, with participants discussing the need for “3-4 companies” to obscure tracking.
Bureaucratic Incompetence Enabled Years of Fraud
The fraudulent arrangement ran from 2018 through 2022, despite internal LAUSD complaints about Innive’s “low quality resources” documented in 2019 text messages. District oversight proved woefully inadequate, with a 2022 audit catching only minor billing irregularities totaling approximately $20,000 while the massive kickback operation continued undetected. This reflects the kind of government waste and lack of accountability that frustrates hardworking Americans who see their tax dollars squandered. The scheme only unraveled when someone involved foolishly bragged about it at a professional conference in early 2022, overheard by an LAUSD employee who reported it to district technology head Soheil Katal, who then alerted the inspector general.
MiSiS System Has History of Failures Costing Taxpayers
The contracts at the center of this scandal involve LAUSD’s My Integrated Student Information System, which manages student records, enrollment, attendance, and grades. MiSiS has been plagued with problems since its catastrophic 2014 launch, technical failures so severe they contributed to Superintendent John Deasy’s resignation in 2015. Rather than learning from past mistakes and implementing rigorous vendor oversight, LAUSD apparently allowed another disaster to unfold. The district’s continued reliance on outside vendors for MiSiS fixes created opportunities for corruption that Peng and Sampath allegedly exploited. Innive continues to hold other government contracts despite the criminal charges, raising questions about vendor accountability across public sector technology procurement.
LA United School District scandal leads to charges as $22M scheme allegedly drained funds meant for students https://t.co/irSFWwPhkD
— Fox News (@FoxNews) March 28, 2026
Shell Companies and Money Laundering Hid Kickback Trail
Prosecutors allege that Sampath funneled over $3 million in kickbacks to Peng through shell companies and intermediaries to disguise the payments. Text messages between the conspirators reveal their awareness of wrongdoing, with communications discussing deletion of chats and avoiding “a direct link” between Peng and Innive. Both defendants face charges of money laundering and illegal financial interests in government contracts. DA Hochman emphasized the severity, stating “We will not tolerate public officials who sell out… Both will be held fully accountable.” An arrest warrant has been issued for Peng, a Pasadena resident, while Sampath faces extradition from Flower Mound, Texas. This deliberate concealment demonstrates the calculated nature of their alleged betrayal of public trust.
District Leadership Questions Mount Amid Separate FBI Investigation
The Peng-Sampath charges emerge as LAUSD faces additional scrutiny, though prosecutors emphasize this case is unrelated to separate 2026 FBI raids targeting Superintendent Alberto Carvalho’s home and office. Carvalho denies any wrongdoing and remains on paid leave, but the dual investigations compound concerns about leadership integrity in California’s largest school district. LAUSD officials claim commitment to “the highest standards of ethics and integrity” while pledging cooperation with investigators. Yet the fact that this alleged $22 million scheme operated for four years under their watch undermines such assurances. Parents and taxpayers deserve better stewardship of educational resources, not bureaucratic promises after corruption is exposed by chance conference gossip rather than proactive oversight.
Sources:
Ex-staffer charged in 22 million LAUSD money laundering scheme – Los Angeles Times
