LA School District: Former Employee and Two Others Charged in $22 Million Embezzlement Scheme

A former employee of the Los Angeles Unified School District (LAUSD) and a tech company CEO have been indicted on charges of siphoning more than $22 million allocated for student education budgets. Prosecutors are calling it one of the largest misappropriation cases in the district's history.

The indicted individuals are former LAUSD technology project manager Hong 'Grace' Fung and Gautam Samarth, CEO of tech company Innive. They are accused of operating a 'pay-to-play' scheme from 2018 to 2022, allegedly steering LAUSD contracts related to the student information system (MiSiS) towards Samarth's company.

Messages recovered between the two during the investigation reportedly contained instructions to delete conversations, discussions on how to secure contracts, and fund transfers through multiple shell companies. Prosecutors stated these messages indicated Fung manipulated contract opportunities to Samarth's advantage by leveraging internal information. Fung has been charged with money laundering and illegal possession of assets in public contracts, while Samarth faces similar charges.

Fung resigned from LAUSD shortly after authorities executed search warrants at her home and workplace in late 2022. An arrest warrant has been issued for Fung, and Samarth is undergoing extradition proceedings to California. Both Samarth and Innive are confirmed to currently hold government contracts in California and across the nation.

LA County District Attorney Nathan Hockman emphasized, "This case represents a flagrant betrayal of public trust, where taxpayer money intended for students was diverted for private gain." He added, "We will never tolerate public officials being sold out or contractors profiting by exploiting the system." LAUSD has officially stated it is aware of the indictment against Fung.