An extensive audit has uncovered allegations against a California school district, accused of issuing diplomas to students in China amid concerns over potentially unlawful financial practices tied to its international program.

The audit, conducted by the Riverside County superintendent of schools, scrutinized the Val Verde Unified School District (VVUSD). Spanning over 1,000 pages, the review suggests that VVUSD improperly awarded diplomas to nonresident Chinese students at Pegasus California School, its affiliated institution in Qingdao, China.

Stephen G. Larson, a partner at Larson LLP, expressed grave concerns to Fox News Digital, stating, “Our audit, initiated by Dr. Gomez, highlights serious issues regarding academic integrity and taxpayer fraud, with potential national security implications. We discovered that a California public school district had improperly conferred diplomas to students in China, which may have been used to falsely bolster credentials for American university admissions.”

Investigators allege that the California district engaged in questionable practices with the China-based school, involving the issuance of invalid diplomas and possible financial irregularities.

Dr. Edwin Gomez, Riverside County Superintendent of Schools, authorized the audit under Education Code section 1241.5(b) following a 2021 investigative report by Business Insider that raised concerns about the district’s operations.

“Our duty is to protect the integrity of public education and ensure the lawful and transparent use of taxpayer funds,” Gomez stated in response to the audit’s findings.

“This audit identified serious concerns that merit further review by the appropriate authorities,” Gomez added. “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 identified evidence that California high school diplomas “may have been issued to students who did not meet applicable legal or residency requirements,” and that fraud and illegal fiscal practices were present in the school district. 

A California school district is accused of improperly issuing diplomas to students in China through a partnership with a foreign “sister school,” raising legal and ethical concerns. (Pegasus California School website/Fox News Digital)

Fox News Digital sat down with Riverside County Sheriff and GOP gubernatorial candidate Chad Bianco, who told Fox that the questionable partnership with the Chinese school is an example of corruption and fraud that exists across California.

“This school in Riverside County shows how corrupt these people really are, where they couldn’t care less about taxpayer money, they couldn’t care less about their own schools, it’s how they can benefit themselves,” Bianco told Fox News Digital. “And so they benefit themselves by gaining, we have no idea how much money, by fraudulently giving diplomas to kids living in China.”

“These kids from China now come into the U.S. and get accepted into these colleges and universities, and California students get nothing,” Bianco added.

Chinese students who received diplomas through the partnership were allegedly promised acceptance to top U.S. universities.

Officials say the findings raise serious concerns about oversight, financial misconduct and the integrity of the district’s global partnership. (Getty Images)

The audit revealed that teachers from the California school district allegedly taught at the school in China, and were provided living accommodations in furnished apartments. 

“Those who accepted a position at Pegasus took an unpaid leave of absence and did not receive a salary or benefits from VVUSD; Pegasus paid annual salaries and provided benefits, including medical and dental benefits, a fully furnished apartment with all utilities paid, and meals,” the audit reads.

As for the content being taught to students in China, the report uncovered that “pages regarding Taiwan had been ripped out of the history books” and that many instructors were not credentialed appropriately. 

The report also alleges that “there is some evidence of potential bribes and/or kickbacks in the form of direct and indirect financial benefits” as a result of VVUSD’s leadership’s relationship with the Chinese school and claims there could be ties between the school and previous superintendent elections in southern California.

The audit alleges a California school district partnered with a China-based school to issue diplomas to nonresident students who may not have met legal requirements. (Zhang Ling/Xinhua via Getty Images)

A spokesperson for VVUSD told Fox News Digital they are complying with the audit. 

“The District will continue to fully comply with the audit process regarding Val Verde’s partnership with Pegasus California School from 2016–2020,” the spokesperson said. “We remain focused on providing transparency and continuing to serve our students, families, and community.”

Reports indicate that Pegasus California School was previously listed on their website, though it no longer appears under the list of schools within the district.

The Pegasus California School website’s “news” section has not been updated since September 2024.

Story tips can be sent to Preston.Mizell@fox.com and on X @MizellPreston