Taxpayers lost $22 million meant for LAUSD students to a massive kickback scheme, exposing government corruption that steals from our kids’ futures.
Story Highlights
- Former LAUSD IT manager Hong “Grace” Peng allegedly steered $22M in contracts to Texas firm Innive, pocketing over $3M in kickbacks via shell companies.
- Los Angeles County DA Nathan Hochman calls it the largest such scheme in LAUSD history, charging Peng and Innive owner Gautham Sampath with felonies.
- Scheme unraveled in 2022 after a brag at a conference; charges announced March 27, 2026, with Peng at large and Sampath facing extradition from Texas.
- Funds diverted from MiSiS student system, amid chronic district failures that already cost taxpayers dearly and eroded trust in public education.
Scheme Details and Charges
From 2018 to 2022, Hong “Grace” Peng, LAUSD’s technical project manager for the MiSiS student information system, awarded $22 million in contracts to Innive, a Texas-based tech firm owned by Gautham Sampath. Innive then funneled over $3 million back to Peng through shell companies and intermediaries. Los Angeles County DA Nathan Hochman announced felony charges on March 27, 2026, including money laundering and illegal financial interests in government contracts. Prosecutors seek maximum penalties of up to seven years in jail. Texts between the pair reveal deliberate concealment, such as routing payments through “3-4 companies” to avoid tracking and deleting chats to hide coordination.
Background on LAUSD’s MiSiS Failures
LAUSD, serving over 400,000 students as the nation’s second-largest district, launched the My Integrated Student Information System (MiSiS) in 2014 to handle enrollment, attendance, grades, and records. The rollout failed catastrophically, crashing repeatedly and forcing Superintendent John Deasy’s 2015 resignation. Peng oversaw MiSiS fixes during the scheme, directing work to Innive despite 2019 complaints about “low quality resources.” A 2022 LAUSD audit flagged only minor $20,000 billing issues with Innive, predating the full criminal probe. This scandal highlights ongoing oversight gaps in a district reliant on vendors for essential student services.
How the Scheme Unraveled
In early 2022, an involved party bragged about the arrangement at a professional conference, overheard by an LAUSD employee who reported it to district tech head Soheil Katal. Katal alerted the inspector general, prompting search warrants at Peng’s Pasadena home and workplace. Peng resigned later that year. The probe, rooted in those 2022 actions, culminated in March 27, 2026 charges. Peng remains at large with an arrest warrant issued; Sampath faces extradition from Flower Mound, Texas. LAUSD confirms awareness and pledges full cooperation, emphasizing ethics standards. No court dates are set yet.
DA Hochman stated, “We will not tolerate public officials who sell out… Both will be held fully accountable.” This case underscores abuse of public trust, diverting taxpayer dollars from classrooms amid frustrations with government waste and mismanagement that hit families hardest through inflation and failed services.
Impacts on Taxpayers and Students
The $22 million loss directly drained funds intended for LAUSD students, exacerbating economic pressures on California taxpayers already burdened by high costs and fiscal irresponsibility. Short-term, MiSiS oversight faces disruption, prompting potential contract reviews. Long-term, expect stricter vendor audits and ethics rules in the district. Innive holds other government contracts and performed work beyond the probed amount, raising risks of broader scrutiny on ed-tech firms. Socially, the scandal erodes trust in public education, politically pressures LAUSD leadership amid separate FBI issues with Superintendent Alberto Carvalho, who denies wrongdoing and remains on paid leave. Students and parents suffer most from diverted resources and unreliable systems.
Sources:
Ex-staffer charged in $22 million LAUSD money laundering scheme
