Taxpayer dollars meant for LAUSD students vanished in a $22 million kickback scheme, exposing government corruption that steals from our children’s future while bureaucrats line their pockets.
Story Highlights
- Former LAUSD IT manager Hong “Grace” Peng allegedly steered $22M in contracts to Texas firm Innive, pocketing over $3M in kickbacks through shell companies from 2018-2022.
- Los Angeles County DA Nathan Hochman filed felony charges on March 27, 2026, calling it the largest abuse of public trust in LAUSD history—the nation’s second-largest school district.
- Scheme unraveled in 2022 after a braggart’s conference slip-up led to searches, Peng’s resignation, and now an arrest warrant for her and extradition for Innive owner Gautham Sampath.
- Funds diverted from MiSiS student information system, plagued by failures since 2014, robbing 400,000+ students amid chronic district mismanagement.
- Demands accountability as LAUSD vows ethics reforms, but Innive still holds government contracts elsewhere.
Scheme Details and Charges
Hong “Grace” Peng, LAUSD’s former technical project manager earning $166,000 in 2021, directed $22 million in MiSiS-related contracts to Innive from 2018 to 2022. Gautham Sampath, Innive’s Texas-based owner, funneled over $3 million back to Peng via shell companies and intermediaries. Prosecutors charged both with money laundering and illegal financial interests in government contracts. Texts revealed concealment tactics, like routing payments through “3-4 companies” to avoid direct links and deleting chats. This pay-to-play operation marks LAUSD’s largest alleged kickback scandal.
More massive fraud in California regulated public schools. A $22 Million Scheme in LA United School District drained funds meant for students!
"LA United School District scandal leads to charges as $22M scheme allegedly drained funds meant for students."https://t.co/oErNFVopw0
— Al Madden (@MaddenAl80972) March 28, 2026
MiSiS System’s Troubled History
LAUSD’s My Integrated Student Information System (MiSiS), meant to handle student records, enrollment, attendance, and grades for over 400,000 pupils, launched catastrophically in 2014. Technical failures forced Superintendent John Deasy’s 2015 resignation. Peng oversaw fixes, awarding Innive contracts despite 2019 complaints about “low quality resources.” A 2022 LAUSD audit flagged only minor $20,000 billing issues with Innive, predating the criminal probe. Chronic reliance on vendors exposed oversight gaps, diverting funds from classrooms to cronies.
How the Scheme Unraveled
In early 2022, an involved party bragged at a professional conference, overheard by an LAUSD employee who reported it to tech head Soheil Katal. Katal alerted the inspector general, triggering late 2022 search warrants at Peng’s Pasadena home and workplace. Peng resigned immediately. On March 27, 2026, DA Nathan Hochman announced charges, issuing an arrest warrant for 56-year-old Peng and seeking Sampath’s extradition from Flower Mound, Texas. No court dates are set; both face up to seven years in prison. LAUSD cooperates fully.
DA’s Stance and District Response
DA Hochman declared, “We will not tolerate public officials who sell out… Both will be held fully accountable,” emphasizing blatant abuse of public trust. LAUSD stated commitment to “highest standards of ethics and integrity” and ongoing vendor compliance reviews. The district, victim in the probe, stresses no connection to separate 2026 FBI raids on Superintendent Alberto Carvalho, who is on paid leave denying wrongdoing. Innive performed the work and retains other government contracts without comment.
Impacts on Taxpayers and Students
Over $22 million in taxpayer funds intended for student services disappeared, eroding trust in public education already strained by MiSiS failures and leadership scandals. Short-term, MiSiS oversight disrupts; long-term, expect stricter audits and vendor ethics in LAUSD. Students and families suffer most, facing unreliable systems while elites profit. Broader effects hit ed-tech vendors nationwide, with Innive’s contracts at risk. This corruption underscores government overreach and waste, fueling demands for fiscal accountability and limited bureaucracy that conservatives have long championed.
Sources:
Ex-staffer charged in $22 million LAUSD money laundering scheme
