Executive Pleads Not Guilty in LA School District Corruption Case
A Texas tech executive has pleaded not guilty following allegations of stealing millions from the Los Angeles Unified School District (LAUSD), a scandal described by prosecutors as among the largest in the district’s history.
Gautam Sampath, 53, appeared in a Los Angeles courtroom on Friday, facing serious charges such as money laundering and conflict of interest violations concerning public contracts, as noted by the Los Angeles County District Attorney’s Office.
Sampath entered his plea before Judge Teresa McGonigle and was released on his own recognizance with strict conditions: he must surrender his passport, remain in the United States, and adhere to all laws.
The case is set to advance on June 10, when a decision will be made regarding the sufficiency of evidence for a trial.
Central to the scandal is an alleged collaboration between Sampath and Hong “Grace” Penn, 53, a former IT project manager with LAUSD, who resides in Pasadena. Penn has also pleaded not guilty to similar charges, including money laundering and having a financial stake in a contract he managed.
Prosecutors allege that the duo orchestrated a multi-year scheme, dubbed a “Pay to Play” operation. This involved directing lucrative contracts to Sampath’s company, Innive, in conjunction with LAUSD’s MiSiS student information system. From 2018 to 2022, it’s claimed that Penn facilitated over $22 million in contracts to Innive while profiting secretly.
In exchange, Sampath purportedly funneled back over $3 million to Penn through intermediaries meant to obscure the transactions.
District Attorney Nathan Hockman condemned the alleged scam, labeling it a “blatant abuse of public trust,” and accused the pair of misappropriating taxpayer funds meant for students.
Authorities believe the scheme may be even more extensive, with Innive reportedly collecting more than $39 million from LAUSD between 2017 and 2023.
Explosive text messages reviewed by investigators suggest that Sampath and Penn were discussing methods to manipulate the system and evade detection. In one message, Sampath inquired about opportunities within LAUSD to exploit, and Penn replied affirmatively that there were many.
Additional texts indicate they took efforts to erase evidence, such as Sampath advising, “Delete all WhatsApp chats…If anyone sees these internal writings, it will be a PRB.” Penn also discussed ways to inflate bills for increased profit.
They even considered forming multiple companies to facilitate fund movement and minimize scrutiny. Sampath allegedly stated that to access funds, they would need “at least 3-4 companies,” while Penn suggested setting up an offshore corporation.
The repercussions extend beyond criminal charges, as LAUSD has filed a civil lawsuit against both executives, accusing them of breaching state conflict of interest laws and failing to disclose their financial relationships while influencing contract decisions.
The lawsuit points out that Penn was involved in the procurement and approval processes for millions of dollars while hiding his financial ties to Sampath. Meanwhile, LAUSD has asserted its commitment to upholding ethical standards and compliance with laws, as expressed by Acting Superintendent Andres E. Chait.
Penn resigned from his position at the district in late 2022 after law enforcement executed search warrants at his home and workplace amid the growing investigation.
This inquiry, led by the District Attorney’s Office of Investigations and LAUSD’s Office of Inspector General, has been active since the allegations emerged in April 2022. Both defendants stand firm in their denial of the charges, as the case approaches a pivotal trial in June to determine if the serious charges will proceed to a jury.
