Inside LAUSD’s alleged $22-million money-laundering scheme, ‘the largest’ in district history 33%
By Howard Blume0%
5/12/2026, 10:00:00 AM
Topics: Corruption, Legal Proceedings
Keywords: Lausd, Money Laundering, Conflict Of Interest, Kickbacks, Hong Grace Peng, Gautham Sampath, Innive
BS Summary: This article contains 17 faulty reasoning types, including Confirmation Bias, Framing Effect, and Quote-first Misdirection, with Negativity Bias as the most egregious example at 41.6% saturation with 533 hits. Analysis detected 1,814 faulty-reasoning hits from 1,282 analyzed words, generating a BS Score of 41.7% and a BS Rank of 33% (14,204 of 21,198 articles). This article is better (less manipulative) than 67.00% of the article peer group.
Over four-years, a Los Angeles school district manager enriched herself with $3 million in kickbacks by working with a tech company executive to deliver $22 million in work, according to allegations in a lawsuit filed by the school district.
She gave high scores to secure contracts, signed off on increasing payouts to the firm and used shell companies to launder money siphoned from the contracts, the suit said.
To apparently keep herself on task, the former employee, Hong "Grace" Peng, 53, wrote a note to herself and posted it on her district office phone to "promote" the contracting firm and "redirect more business to" it, the lawsuit alleges.
Now, the Los Angeles Unified School District wants its $22 million back.
The civil suit, filed last month in L.A.
County Superior Court, offers a detailed look at how Peng, a manager for the district's Information Technology Services, and Gautham Sampath, 53, whom the complaint describes as chief executive of Texas-based Innive, allegedly misdirected millions of dollars obtained through fraud.
The suit targets Peng, Sampath and Innive, an information technology company.
Sampath's status with the company is not clear.
An attorney for Peng declined to comment about the LAUSD suit.
An attorney for Sampath did not respond to requests for comment but had earlier defended his client as fully and competently providing all contracted services to L.A.
Unified.
Representatives of Innive did not respond to calls and emails.
L.A.
County Dist.
Atty.
Nathan Hochman, who filed criminal charges against the pair in March, called it "the largest money-laundering operation in LAUSD history."
Peng, a Pasadena resident, faces one felony count of money laundering and having a financial interest in a contract or purchase made in an official capacity.
Sampath of Flower Mound, Texas, is charged with one felony count of money laundering, having a financial interest in a contract or purchase made in an official capacity and aiding and abetting a government official to have a financial interest in a contract or purchase made in an official capacity.
Peng and Sampath have pleaded not guilty.
Despite having "an undisclosed financial and personal relationship with Sampath," Peng allegedly participated in securing the contracts by evaluating Innive bids, signing certifications that she had no financial connections to Innive personnel, overseeing Innive requests for change orders and approving time sheets, according to court documents.
Meanwhile, Sampath knew about Peng’s alleged conflict because Peng told him she sat on the selection committee and had "already broken the law for him," funneling LAUSD work to the firm, the district suit states.
In all, the company received about $39 million in contracts with L.A.
Unified, with $22 million in contracts "tainted" by illegal conduct from 2018 through 2022, the lawsuit states.
Peng allegedly received more than $3 million in illegal kickbacks from Sampath or his company, according to court documents.
The L.A.
Unified suit appears to target the entire $22 million as restitution plus potential punitive damages.
When a contract is obtained and carried out illegally, the complaint states, "the public entity may recover amounts paid under it without restoring the benefits it received."
The work tied to the contracts is primarily related to the district’s My Integrated Student Information System, which manages student records, enrollment, attendance, grades and schedules.
This system was a disaster when it debuted in 2014.
Through the costly efforts of district staff and private contractors, which included Innive, the system gradually became functional and continues in use.
The separate criminal complaint relies heavily on text messages between Peng and Sampath.
In one instance, Peng allegedly texted to Sampath: "I broke all law for you already lol."
And: “I have a way to get those money.
We can load them up more work, then charge more hours.”
“Delete all the watsup chats,” Sampath allegedly texted Peng on Feb.
15, 2018.
“If anyone sees the text about those internal things it will be a prb.”
The civil complaint, while referencing some of the texts, lays out the alleged wrongdoing step by step.
The L.A.
Unified suit alleges that Peng and Sampath "had a relationship dating back at least to 2015."
Innive began working for the district in 2017.
In one example of how the alleged scheme worked, Peng submitted scores for an Innive bid in mid-February 2018, giving Innive the higher score, which led to a contract, the lawsuit states.
A month later, according to the complaint, Peng asked Sampath whether she should send him bank account information related to a company called DDManta.
Sampath told her to send it to him so he could forward it to his team.
DDManta was a company Peng "owned or controlled," the complaint says.
Sampath and Innive "used intermediary companies, including IT Vertex, Diligent Group, CSI Solutions, PAV IT Global, Artestech and 40K, to route money tied to Innive’s LAUSD business to DDManta for Peng’s benefit," lawsuit documents allege.
A May 17, 2019, note on Peng’s district office phone stated, "among other things": “Protect & train Innive contractors and Innive inc. from all angles; Promote Innive vertically and horizontally within the District; Redirect more business to Innive,” according to the lawsuit.
Peng signed a change order on May 14, 2019, increasing payouts by $270,344 and extending it through Dec. 31, 2019, and signed separate work orders in 2019 for $550,000 and $1,326,000, the complaint states.
Sampath allegedly texted Peng on May 20, 2019, that close to a million dollars would be transferred to Peng and "would be easy to track unless multiple companies were used," according to court documents.
Another company involved in the scheme was Hexalytics, described in the L.A.
Unified complaint as a Delaware corporation purportedly based in Texas and founded on March 26, 2021.
"Peng held herself out as vice president of business development for Hexalytics, and Sampath was tied to Hexalytics as its chief executive officer," the complaint states.
"Peng had email addresses at both Hexalytics and Innive, received a check from Hexalytics, and was tied to transfers of funds between companies."
Hexalytics "listed LAUSD as a customer despite having no direct contract with LAUSD, and described the same services Innive provided," the complaint states.
By mid-2020, Peng "was no longer merely influencing the front end of procurements; she was requesting and managing a series of high-dollar Innive change orders herself," the complaint states.
Individual payments from July through November 2020 included $244,200, $463,200 and $1,197,600, court documents allege.
To keep things going in a new master agreement, on July 30, 2020, Peng submitted scores in a competition for new work "and again gave Innive her highest score," resulting in a new agreement with the firm.
One change order alone was for nearly $3 million, according to the civil suit.
The alleged scheme began to unravel in April 2022, according to the criminal complaint, after a former L.A.
Unified employee, who had gone to work for Innive, told LAUSD tech staffer Richard Alvarez at a professional conference that Peng was working for Sampath.
Alvarez reported the issue to his supervisor Soheil Katel, who alerted the district's Office of Inspector General.
Peng resigned in early October 2022 as the investigation was underway, the school district lawsuit states.
The alleged wrongdoing has no connection to FBI raids in February at the San Pedro home and downtown office of L.A. schools Supt.
Alberto Carvalho, who joined L.A.
Unified in February 2022.
Shortly after the raids, the Board of Education put Carvalho on paid leave pending further developments.
That probe is connected to an investigation of a district contractor hired to create an artificial intelligence chatbot.
Carvalho has denied any wrongdoing and asked to be returned to his position.
Speakers
7speakers23%attributed speech987writer words
Voice mapSelect a segment to jump to its words
Selected voice
100%flagged-word coverageNathan Hochman
20 attributed words6.8% of attributed speech82% writer coverage
Attribution is sentence-level. Pattern percentages are calculated only from words assigned to that voice.
Loading…
Loading…
Loading…
Loading…
Loading…
Loading…
Analysis
Hover over highlighted words in the article to view the associated bias or fallacy analysis.