Inside LAUSD’s alleged $22-million money-laundering scheme, ‘the largest’ in district history
The Los Angeles Unified School District (LAUSD) is suing a former IT manager, Hong 'Grace' Peng, and contractor Gautham Sampath, alleging they laundered $22 million through kickbacks from contracts awarded to Sampath’s company, Innive, between 2018 and 2022. Peng and Sampath face criminal charges, including money laundering, with Peng accused of approving contracts while receiving $3 million in kickbacks and using shell companies to hide the funds.
The Los Angeles Unified School District (LAUSD) has filed a civil lawsuit seeking to recover $22 million from a contractor, alleging a former district manager and the company’s CEO orchestrated one of the largest money-laundering schemes in LAUSD history. Hong 'Grace' Peng, a 53-year-old manager for LAUSD’s Information Technology Services, allegedly steered lucrative IT contracts to Innive, a Texas-based company led by Gautham Sampath, in exchange for kickbacks totaling $3 million. According to the lawsuit, Peng approved contracts, inflated payouts, and used shell companies to launder funds while falsely certifying she had no financial ties to Innive. Court documents claim she even posted a note on her office phone urging colleagues to redirect more business to the company. Sampath, 53, allegedly knew of Peng’s conflict of interest and allegedly told her she had ‘already broken the law for him.’ LAUSD’s lawsuit targets Peng, Sampath, and Innive, with the district claiming $22 million of the $39 million in contracts awarded from 2018 to 2022 were tainted by fraud. L.A. County District Attorney Nathan Hochman separately filed criminal charges in March, calling it ‘the largest money-laundering operation in LAUSD history.’ Peng faces one felony count of money laundering and having a financial interest in a contract, while Sampath is charged with money laundering, conflict-of-interest violations, and aiding Peng. Both defendants have pleaded not guilty and denied wrongdoing. Peng’s attorney declined to comment, while Sampath’s legal team previously defended his compliance with contracts. Innive did not respond to requests for comment. The case highlights broader financial challenges for LAUSD, which is also facing over $1 billion in bond costs for sex abuse claims. The lawsuit provides detailed allegations of Peng’s role in approving contracts, signing false certifications, and overseeing Innive’s billing requests. Court documents suggest Sampath was aware of Peng’s actions, reinforcing claims of a coordinated scheme to defraud the district.
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