Taxpayer dollars meant for LAUSD students vanished in a $22 million kickback scheme, exposing how government corruption steals from our children’s future while bureaucrats cash in.
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.
- Los Angeles County DA Nathan Hochman calls it the largest pay-to-play scandal in LAUSD history, charging Peng and Innive owner Gautham Sampath with felonies.
- Scheme targeted MiSiS student information system, a platform plagued by failures since 2014, diverting funds from 400,000 students.
- Arrest warrant issued for Peng; Sampath faces extradition from Texas, with maximum penalties up to 7 years in jail.
- Amid national frustrations with fiscal mismanagement, this case demands accountability to protect taxpayer money and public trust.
Scheme Details and Charges
From 2018 to 2022, Hong “Grace” Peng, LAUSD’s former technical project manager for the MiSiS system, awarded $22 million in contracts to Innive, a Texas-based tech firm owned by Gautham Sampath. Innive funneled over $3 million back to Peng through shell companies and intermediaries to conceal the transactions. Prosecutors charged both with money laundering and illegal financial interests in government contracts. Texts revealed deliberate efforts to hide links, such as routing funds through “3-4 companies” to avoid tracking. This blatant abuse diverted funds intended for student services in the nation’s second-largest school district.
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
Unraveled by a Conference Boast
In early 2022, an involved party bragged about the scheme at a professional conference, overheard by an LAUSD employee who reported it to district tech head Soheil Katal. Katal alerted the inspector general, triggering search warrants at Peng’s Pasadena home and workplace. Peng resigned later that year. A prior LAUSD audit flagged only minor $20,000 billing issues with Innive, missing the full scope. Despite internal 2019 complaints about Innive’s “low quality resources,” Peng continued steering contracts, highlighting severe oversight failures in public spending.
Prosecutor’s Aggressive Response
On March 27, 2026, Los Angeles County DA Nathan Hochman announced the felony charges, issuing an arrest warrant for 56-year-old Peng and seeking extradition for Sampath from Flower Mound, Texas. Hochman declared, “We will not tolerate public officials who sell out… Both will face full accountability,” pursuing maximum penalties of up to seven years in prison. LAUSD, cooperating fully, reaffirmed its commitment to ethics while Peng earned $166,000 in 2021 salary. Innive holds other government contracts and declined comment. No court dates are set yet.
This scandal underscores taxpayer frustrations with government waste, echoing nationwide anger over overspending and fiscal irresponsibility that burden families. While conservatives celebrate accountability, it reinforces demands for limited government and transparent use of education funds. Students suffer when insiders prioritize personal gain over core duties like reliable systems for enrollment and grades.
Impacts on Students and Taxpayers
LAUSD serves over 400,000 students, yet $22 million vanished from MiSiS fixes—a system that crashed spectacularly in 2014, forcing Superintendent John Deasy’s 2015 resignation. Short-term, the scandal disrupts oversight and prompts contract reviews. Long-term, it erodes trust in public education, pressures leadership amid separate FBI probes, and invites nationwide scrutiny of ed-tech vendors. Taxpayers foot the bill for this greed, fueling calls for stricter audits and ethics to safeguard funds for actual student needs amid ongoing economic strains.
Sources:
Ex-staffer charged in $22 million LAUSD money laundering scheme
