Prosecutors say the alleged scheme sent more than $22 million in district work to one company and routed over $3 million back through intermediaries.
LOS ANGELES, Calif. — Los Angeles County prosecutors have charged a former Los Angeles Unified School District employee and a Texas technology company owner in an alleged money laundering and contracting scheme that authorities say steered more than $22 million in district work and kicked back over $3 million.
The charges put a fresh spotlight on how one of the nation’s largest school systems handled technology contracts tied to its student data system. Prosecutors say the case grew out of a district investigation that began in 2022 and later moved to the county district attorney’s office. The complaint accuses former technical project manager Hong “Grace” Peng and Innive owner Gautham Sampath of using Peng’s district role to direct contracts to Sampath’s company, then moving money back to Peng through other channels. Both face felony counts, and authorities say the broader investigation is still active.
According to prosecutors, the alleged conduct took place from 2018 through 2022, when Peng worked in LAUSD’s information technology operations as a technical project manager. Investigators say she took part in recommending and approving contracts, many of them tied to the district’s My Integrated Student Information System, known as MiSiS. Those contracts went largely to Innive, a company run by Sampath, and totaled more than $22 million, prosecutors said. District Attorney Nathan Hochman said the case amounted to “a blatant abuse of public trust” and described it as one of the biggest alleged money laundering schemes in district history. Prosecutors say the arrangement ended up sending more than $3 million back to Peng through intermediaries rather than direct payments. Authorities have not said in public filings that classroom services were interrupted, but they say school money meant for district operations was diverted through a pay to play arrangement.
The criminal complaint filed in Los Angeles County Superior Court charges Peng with money laundering and with having a financial interest in a contract made in an official capacity. Sampath is charged with money laundering, having a financial interest in a contract made in an official capacity, and aiding and abetting a public official in such a contract. Prosecutors said an arrest warrant was issued for Peng and an extradition warrant was issued for Sampath, who lives in Flower Mound, Texas. Bail was set at $500,000 for each, according to local reporting on the court action. The district attorney’s office said arraignments will be scheduled later. If convicted as charged, each defendant could face up to seven years in county jail. The case number is 26CJCF01762. Prosecutors have stressed that the charges are allegations and that both defendants are presumed innocent unless proven guilty in court.
Public officials gave a rough account of how the case surfaced. LAist reported that an LAUSD employee attended a conference in 2022 and heard from a former colleague about a possible link between Peng and Sampath. That employee then alerted a supervisor, who contacted the district’s inspector general. The district attorney’s office said LAUSD’s Office of Inspector General conducted an initial inquiry in 2022, referred the matter to prosecutors and helped execute a search tied to the investigation. Peng later resigned from LAUSD after a search warrant was served at her home and workplace in late 2022, prosecutors said. Authorities have said some of the texts and payment trails found during that inquiry are now part of the charging document. One message highlighted by prosecutors and described in local reports had Peng telling Sampath he was “lucky” she sat on a selection committee, then adding that she had already broken the law for him. Prosecutors have also said other messages suggest efforts to discuss contract awards and move money while hiding the relationship.
The case matters beyond the two defendants because of what it says about oversight at a huge public school system that depends on outside vendors for major technology projects. MiSiS, the district student information system at the center of many of the questioned contracts, is a critical piece of LAUSD’s administrative work. It handles core student records and supports daily school operations across a district that serves hundreds of thousands of students. Any allegation that one employee could influence years of vendor work worth more than $22 million raises new questions about how contracts were reviewed, how conflicts were disclosed and whether warning signs were missed. Prosecutors have not publicly accused other district workers of wrongdoing in this case, and the present complaint focuses on Peng and Sampath. Still, the district attorney’s office has said Innive and its owner hold other government contracts in California and elsewhere, a detail that may widen interest in the investigation even if no additional charges have yet been announced.
Both sides have already begun sketching out their arguments. Prosecutors say the contracts and the flow of money were linked parts of the same plan. They describe a multi year pattern in which Peng used her position inside LAUSD to help one vendor and then benefited financially once those contracts were in place. Sampath’s lawyer, Michael Kraut, told local media that his client did not know how the contracts were awarded and said Innive performed the work it was hired to do. Kraut also said the money at issue involved other long term dealings with Peng and was unrelated to LAUSD contracts. Peng declined to comment when contacted by local reporters. LAUSD, for its part, said it would continue to cooperate with investigators but would not discuss specifics while the case moves through court. That leaves several major questions unanswered in public: whether prosecutors believe more people knew about the arrangement, how the money was routed in each step, whether district controls were bypassed or simply failed, and whether any agency outside LAUSD is reviewing Innive contracts now.
For now, the legal process is at an early stage. The complaint sets out the charges, but a preliminary court fight could focus on warrants, extradition, bail and the evidence supporting the laundering allegations. Prosecutors have said the investigation remains open, which often means more records can still be gathered and more witnesses can still be interviewed. Defense lawyers, meanwhile, are likely to challenge the claim that payments to Peng were tied to official action on school contracts. Court records reviewed so far do not show a trial date, and the district attorney’s office has not announced a date for arraignment. In public statements, prosecutors have framed the case as a corruption matter involving taxpayer money that should have supported school operations. The next important step will be the first court appearances, where the defendants are expected to enter pleas and the case calendar will begin to take shape.
The scene around the case has carried the feel of another hard hit to public confidence in district leadership. LAUSD’s downtown headquarters on Beaudry Avenue again became the backdrop for questions about contracting, oversight and who benefits when public systems rely on private vendors for essential work. Prosecutors have used unusually strong language for a school district case, saying money intended for students was instead pushed into personal channels. Supporters of the charges say the numbers alone make the case impossible to ignore: more than $22 million in contracts, more than $3 million allegedly sent back, and four years of decisions now under scrutiny. The defense, however, is pointing to the work Innive actually performed and arguing that prosecutors moved too fast. Those competing narratives are likely to shape the next stage of the case as judges review the allegations, lawyers test the evidence and the district faces more pressure to explain how the arrangement could have lasted as long as investigators say it did.
The case stood as of March 29 with warrants issued, arraignments still unscheduled and the district attorney’s office saying the investigation continues. The next clear milestone is the defendants’ first appearance in Los Angeles County Superior Court, where the allegations will face their first formal test.
Author note: Last updated March 29, 2026.