LAUSD seeks – Los Angeles Unified School District filed a civil lawsuit claiming a former IT manager and an Innive executive used kickbacks, bid evaluations, and shell companies to divert $22 million in allegedly tainted contracts from 2018 to 2022. The district says the pa
When a contract is steered through a bureaucracy. the damage often comes slowly—until the paperwork starts to tell a different story.. In this case. Los Angeles Unified School District says the receipts add up to $22 million. allegedly funneled through bid scores. change orders. and layers of companies that. according to the district. were designed to hide where the money was really going.
The civil suit was filed last month in Los Angeles County Superior Court.. It seeks to recoup $22 million tied to contracts the district says were “tainted” by illegal conduct from 2018 through 2022.. The complaint describes the alleged scheme as the largest money-laundering operation in LAUSD history. a characterization echoed by County District Attorney Nathan Hochman. who filed criminal charges against the pair in March.
In the lawsuit. LAUSD accuses former district employee Hong “Grace” Peng. 53. of using her role in the district’s Information Technology Services to enrich herself with kickbacks of more than $3 million.. The suit also targets Peng’s alleged co-conspirator. Gautham Sampath. 53. identified in the complaint as the chief executive of Texas-based Innive. and it names Innive as a defendant.. Sampath’s status with the company was not clear.
Peng’s attorney declined to comment on the civil case. An attorney for Sampath did not respond to requests for comment, but earlier defended the executive as fully and competently providing all contracted services to Los Angeles Unified. Representatives of Innive did not respond to calls and emails.
The district says Peng evaluated Innive bids. signed certifications stating she had no financial connections to Innive personnel. oversaw Innive requests for change orders. and approved time sheets.. At the same time. the lawsuit says she and Sampath maintained an “undisclosed financial and personal relationship” dating back at least to 2015. even though Innive began working for the district in 2017.
The civil complaint also paints a picture of how money moved through intermediaries.. LAUSD alleges that Peng asked Sampath whether she should send bank account information related to a company called DDManta. which the complaint says Peng owned or controlled.. The suit alleges that Sampath and Innive used intermediary companies—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.
In the district’s telling, Peng did more than influence the front end of procurement.. By mid-2020. the complaint alleges she was “requesting and managing a series of high-dollar Innive change orders herself.” The suit describes individual payments from July through November 2020 including $244. 200. $463. 200 and $1. 197. 600.. It says that on July 30. 2020. Peng submitted scores in a competition for new work and again gave Innive her highest score. leading to a new master agreement.
The district points to change orders as key turning points.. Peng allegedly signed a change order on May 14, 2019, increasing payouts by $270,344 and extending it through Dec.. 31, 2019.. The complaint also says she signed separate work orders in 2019 for $550,000 and $1,326,000.. One change order, the suit says, was for nearly $3 million.
Sampath and Peng. in the civil filing. are connected through messages that the district says show awareness of conflicts and efforts to keep things concealed.. The criminal complaint. which relies heavily on text messages. includes an alleged exchange in which Peng texted Sampath: “I broke all law for you already lol.” She also allegedly wrote: “I have a way to get those money.. We can load them up more work, then charge more hours.”
On Feb. 15, 2018, the criminal filing alleges Sampath told Peng, “Delete all the watsup chats,” adding, “If anyone sees the text about those internal things it will be a prb.” The civil complaint references some of the texts as it lays out alleged wrongdoing step by step.
LAUSD also describes a note meant to keep the contracting relationship moving.. 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.”
The district says the scheme attached itself to a specific system that has been costly and complicated for years: the My Integrated Student Information System. which manages student records. enrollment. attendance. grades and schedules.. The system was a “disaster” when it debuted in 2014. and through the costly efforts of district staff and private contractors—including Innive—it gradually became functional and continues in use.
In one alleged financial maneuver, Sampath texted Peng on May 20, 2019, that close to a million dollars would be transferred to her and would be easy to track unless multiple companies were used, according to court documents.
The lawsuit also describes another entity. Hexalytics. described in the complaint as a Delaware corporation purportedly based in Texas and founded on March 26. 2021.. LAUSD alleges Peng held herself out as vice president of business development for Hexalytics while Sampath was tied to Hexalytics as its chief executive officer.. The complaint says Peng had email addresses at both Hexalytics and Innive. received a check from Hexalytics. and was tied to transfers of funds between companies.. The suit adds that Hexalytics “listed LAUSD as a customer despite having no direct contract with LAUSD. and described the same services Innive provided.”
The district says the money-laundering allegations began to unravel in April 2022. according to the criminal complaint. after a former LAUSD 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.
While LAUSD’s civil case centers on procurement and payments, the criminal case frames the alleged scheme as money laundering by focusing on the messaging. Peng and Sampath have pleaded not guilty in both matters.
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. faces 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.
The district’s civil 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 pattern the district alleges is tied to the same sequence: Peng’s evaluations and approvals helped move Innive work forward. change orders increased payouts. messages discussed loading more work and tracking money. and payments were routed through intermediaries toward DDManta and. later. Hexalytics—first as “front end” influence and. by 2020. as management of high-dollar change orders.
The lawsuit also draws a line around other events.. LAUSD says 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 LAUSD in February 2022.. 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.
LAUSD Hong Grace Peng Gautham Sampath Innive money laundering restitution Information Technology Services My Integrated Student Information System change orders shell companies