Feds opened probe of California school district's diplomas for Chinese students

A federal investigation has been initiated into a Southern California school district due to its questionable connections with a boarding school in China, following revelations from a report by Business Insider. The inquiry, which began in late 2023, remains ongoing, although details about its current status have not been disclosed. The investigation was spurred by a critical audit released last week by state education authorities, also prompted by Business Insider’s earlier findings. This audit has been forwarded to the local district attorney. The Val Verde Unified School District's relationship with Pegasus California School, a private institution in Qingdao, China, has raised significant concerns. The private school charges students considerable tuition fees and has been accused of receiving diplomas from Val Verde that may violate state regulations. In response to the initial report, the Riverside County Office of Education requested a thorough audit from the Fiscal Crisis and Management Assistance Team (FCMAT), a state agency. Subsequent court documents revealed apprehensions that the diplomas issued to Pegasus students might entail fraud or other illicit financial activities. In May 2024, the Riverside office filed a lawsuit against FCMAT, claiming that their investigation was inadequate. They also referred the case to the U.S. Attorney's Office for the Central District of California, seeking a federal inquiry into the Pegasus Diploma Program. As of May 2024, the investigation remains active, with county education officials being interviewed about the matter. Ciaran McEvoy, a spokesperson for the federal prosecutors, has refrained from commenting on the ongoing status of the case. Meanwhile, Alex Sponheim, representing Val Verde, stated that the district has not been contacted by the Justice Department regarding these issues. A ruling in February 2025 mandated that FCMAT’s reports concerning Pegasus remain confidential, as the Riverside County Office of Education argued that releasing them could hinder ongoing investigations into potential wrongdoing. Shortly thereafter, the Riverside County Office enlisted the Los Angeles law firm Larson LLP to scrutinize the connections between Val Verde and Pegasus. The resulting audit from Larson LLP discovered "sufficient evidence" indicating potential fraud and misappropriation of funds. Stephen Larson, a partner at the firm, expressed alarming concerns regarding academic integrity and the possibility of taxpayer fraud, suggesting that the issued diplomas might have been used to lend false legitimacy to students aiming for admission into American universities. Although the diploma program has been suspended, Pegasus California School is still operational and claims accreditation from the nonprofit organization Cognia. However, the audit revealed that the Western Association of Schools and Colleges had denied accreditation to Pegasus due to unmet standards. Despite this, Pegasus maintains on its website that it was established with the endorsement and support of the California Department of Education. The California Department of Education has previously emphasized its commitment to preventing the misuse of public funds and has voiced support for investigations into this situation. A spokesperson from the Riverside County District Attorney's Office indicated that they could not comment on ongoing investigations, while the State Controller's office confirmed it is reviewing the audit to decide on appropriate measures.