Hong “Grace” Peng, an IT employee at the Los Angeles Unified School District (LAUSD), has been accused of masterminding a multi-million-dollar scheme in collaboration with Gautham Sampath, CEO of the Texas-based technology company Innive.
The two allegedly conspired to exploit LAUSD contracts, receiving substantial kickbacks and routing millions through various intermediaries. The case has come to light with the release of incriminating text messages and evidence that could send both individuals to prison.
The Scheme and the Allegations
According to LA County District Attorney Nathan Hochman, Peng fed over $22 million in LAUSD contracts to Sampath’s company between 2018 and 2022. In return, Sampath allegedly routed and laundered more than $3 million in kickbacks to Peng.
These illicit payments were concealed through a series of companies and intermediaries, making the illicit financial transactions harder to trace.
Between 2017 and 2023, Innive received over $39 million in payments from LAUSD, further fueling the investigation into this alleged pay-to-play scheme.
Incriminating Text Messages
A crucial piece of evidence comes from text messages between Peng and Sampath, which prosecutors say provide a clear indication of their awareness of the illegal activities they were engaging in.
In one text exchange, Sampath asks Peng about “other opportunities in LAUSD” that they could “exploit,” to which she responds, “Yea, a lot of them.”
Another message from Sampath shows a conscious effort to avoid detection: “Delete all watsup chats… if anyone sees the text about these internal things it will be a prb,” suggesting that they were trying to cover their tracks.
Later in 2018, Peng appears to encourage Sampath to seize the opportunity: “Let’s grab these money first.. Its already in the pocket. Low hanging fruits… let’s get these money… It’ll be good for us.”
Setting Up Fake Entities and Laundering Money
The text messages also reveal the duo’s strategy to hide their illicit activities. Sampath discusses setting up several shell companies to launder the kickbacks, saying, “We need to come up with lot of companies, at least 3-4 to take out the money… Close to million will be transferred to you… Easy to track unless we are very careful.”
In another exchange, Peng suggests setting up a company in a foreign country to further disguise their financial activities, stating, “Should we start another company under a different name?… I can setup a company in HK… China… or Singapore.”
The Charges
As a result of these findings, Peng faces two felony charges: money laundering and having a financial interest in a contract or purchase made in her official capacity as an LAUSD employee.
Sampath has been charged with four felonies, including money laundering, having a financial interest in a contract or purchase made in an official capacity, and aiding and abetting Peng in her criminal activities.
Additional Evidence of Misconduct
Further damaging evidence includes an email exchange between Peng and Sampath, in which Peng writes, “You’re so lucky I’m on the selection committee.” Sampath responds, “Why did you say Innive is lucky?” to which Peng replies, “Because you have me… I broke all law for you already lol.”
Moreover, Peng signed a contract integrity certification in which she was asked if she had received or been promised any gifts, royalties, or gratuities from contractors, to which she falsely answered “No.”
Potential Consequences
If convicted, both Peng and Sampath face up to seven years in state prison for their roles in the scheme. The case is still ongoing, and further investigations may reveal more about the extent of the financial misconduct within LAUSD.
