A California county has completed an investigation into a school district over China ties, finding evidence that the Val Verde Unified School District may have improperly issued diplomas to a school in China and may have been involved in fraud and other illegal financial activity.

“This audit identified serious concerns that merit further review by the appropriate authorities,” Riverside County Superintendent of Schools Edwin Gomez stated in a March 18 announcement. “We will continue to act with integrity, follow the law, and ensure that the interests of students and the public remain at the center of every decision.”

The audit was completed Feb. 19, and many pages in the 1,000-plus-page report are documents from the investigation. The probe followed a report by Business Insider in 2021 that Val Verde was issuing diplomas to an international boarding school, Pegasus California School, in Qingdao, China.

A spokesperson with the Val Verde Unified School District said the district has complied with the audit and will continue to do so. “We remain focused on providing transparency and continuing to serve our students, families, and community,” the statement reads.

Pegasus California School did not respond to requests for comment from The Epoch Times by publication time.

‘California School’ in Qingdao, China

According to the report, Steven Ma, a U.S. citizen, began working on establishing Pegasus in 2013, working with former California Secretary of Education and former Riverside County Superintendent of Schools David Long, and then-California State Superintendent of Public Instruction Tom Torlakson. Long recruited then-Val Verde Superintendent Michael McCormick, who encouraged Val Verde teachers and administrators to join Pegasus.

In 2014, Torlakson signed an agreement with the mayor of Qingdao, China, approving the use of California curriculum at the Pegasus school beginning 2016. A three-year diploma pilot program was established.

McCormick was selected as an ambassador for a College Board 2014 trip to China, which was met with much fanfare by Chinese authorities and state media, according to the audit. He was recommended by Long to his superintendent position at Val Verde the following year.

In 2017, Ma and Long were appointed international education liaisons of the California Department of Education. Long served as American principal and chairman of the board of Pegasus between 2016 and 2020, where he recruited teachers for Pegasus and met with college administrators to discuss the acceptance of Pegasus students, according to the report.

One of the most recent news releases on the Pegasus school website is a 2024 piece on Ma returning to China, describing him as the founder of the school and someone who “has been deeply involved in China-U.S. education” and met with Xi Jinping, leader of the Chinese Communist Party, and President Barack Obama.

According to the Pegasus website, the school offers “authentic Californian education” in China and “has successfully served as a bridge between China students and renowned universities around the world.” It states that 30 percent of its 2025 graduates were admitted to the top 30 universities in the United States, and 82 percent were admitted into the top 40.

Teachers and administrators in the Val Verde district were recruited to participate at Pegasus in China and received salary raises upon return, according to the report.