Former LAUSD Employee and Vendor Accused in $22 Million Contract Fraud
Charges Filed in Alleged LAUSD Money Laundering Scheme
A former employee of the Los Angeles Unified School District (LAUSD) and the owner of a technology vendor have been charged in a scheme that allegedly funneled approximately $22 million in district contracts to the vendor. Prosecutors from Los Angeles County have detailed the charges against Hong "Grace" Peng, 53, of Pasadena, and Gautham Sampath, 53, of Texas.
Peng has been charged with one felony count each of money laundering and maintaining a financial interest in a contract made in her official capacity. She previously served as a technical project manager for LAUSD. Prosecutors allege that Peng played a pivotal role in directing contracts associated with the district’s My Integrated Student Information System (MiSiS) to Sampath’s company, Innive. The total value of these contracts exceeded $22 million.
Sampath faces similar charges, including one count each of money laundering, having a financial interest in a public contract, and aiding and abetting a government official in maintaining such an interest. According to prosecutors, Sampath allegedly funneled over $3 million back to Peng through intermediaries.
In 2022, Peng resigned from her position as search warrants were executed at both her home and workplace. Sampath’s firm reportedly holds government contracts across the United States.
An arrest warrant has been issued for Peng, while an extradition warrant has been made for Sampath. The exact locations of both individuals remain unclear.
"This case involves a blatant abuse of public trust—funneling taxpayer dollars intended for students into personal coffers," said Los Angeles County District Attorney Nathan J. Hochman. "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. Both will be held fully accountable."
In response to the charges, LAUSD released a statement acknowledging its awareness of the allegations against the former employee, who worked from 2018 to 2022. The statement emphasized LAUSD’s commitment to ethical conduct and cooperation with authorities, noting that an investigation was initiated once a potential conflict of interest was identified in April 2022.
The investigation has included text messages exchanged between Peng and Sampath that prosecutors assert indicate intent to defraud and violate conflict of interest laws. After receiving a contract for bidding in February 2018, Sampath messaged Peng, urging her to delete specific communications to avoid detection. Within the messages, they discuss potential contract opportunities within LAUSD, revealing a deeper level of collusion.
Hochman has stated that the text exchanges provide substantial evidence regarding their mental intent. "Their own text messages will prove the mental intent," he remarked, highlighting the severity of the alleged infractions.
