• An Insider investigation has found that some of California's highest-ranking education officials and leading public universities worked closely with a swaggering entrepreneur who launched a private high school, Pegasus California School, for elite families in China.
• Pegasus also developed a relationship with the Val Verde Unified School District, a public school district in Southern California.
• That relationship included all Pegasus students in China receiving Val Verde diplomas. Experts consulted by Insider said that a public school district giving high-school diplomas to private-school students in another country raises red flags.

A public school district in Southern California bestowed its diplomas to students at a private high school in China, Insider has learned.

That school district, the Val Verde Unified School District in Riverside County, developed a close-knit arrangement with the school, Pegasus California School, based in Qingdao, China. In addition to the diplomas, the arrangement also drew resources and teachers away from Val Verde, a struggling school district, for the benefit of wealthy Chinese students. Experts consulted by Insider said that a public school district giving high-school diplomas to private-school students in another country raises red flags.

"We're not for sale here, and so you can't sell diplomas because of a relationship you have," said Delaine Eastin, who served as California's state superintendent of public instruction in the 1990s and early 2000s. "You're not a California student [and] you're not entitled to a California diploma, so if they are doing that it's wrong."

An Insider investigation into the elite Chinese boarding school has found that some of California's highest-ranking current and former education officials - including Tom Torlakson, then the state superintendent of public instruction, and David Long, who previously served as the state secretary of education before becoming principal of Pegasus - worked closely with the school's founder, a swaggering entrepreneur named Steven Ma, to help set up Pegasus as a California public school in China, and give its foreign students preferential treatment that seemed to elude American public-school students.

Ma's school officially opened in 2016 based on the premise that - by mimicking the curriculum of a public high school in California - he could increase the chances that his wealthy Chinese students would gain admission to top U.S. colleges and universities. The school even guaranteed parents, in writing, that every graduate would gain admission to one of the top 100 US universities.

The public servants, records show, burnished relationships with leading public universities and a California school district - Val Verde - to establish that school, which was advertised to elite Chinese families as a California high school in China.

But, Ma had a problem: to open a California high school with students graduating each year, he needed to figure out a way to bestow them with credible state diplomas. That's where Val Verde proved helpful. In the spring of 2017, The district approved a three-year diploma pilot program for Pegasus, authorizing all Pegasus graduates to receive a Val Verde diploma and pledging at a school board meeting to "continue to serve the students of Pegasus California High School in various administrative and teaching capacities." The Val Verde website was updated to include Pegasus in the list of the district's schools.

An Insider review of Pegasus diplomas, provided by a source and through a records request, has confirmed that the documents were indeed conferred by Val Verde.

"The bottom line was they needed a school district that would provide a high-school diploma," one former Pegasus employee told Insider. "I thought it was odd that an American public school was giving a diploma to clearly what was a private Chinese high school. I could not get my head wrapped around that one. I never did understand how that worked."

In addition to the diplomas, the district superintendent, Michael McCormick, encouraged Val Verde staffers to leave their posts in California for China, offering some sweet benefits: furnished apartments, meals, excellent pay with health benefits, and - perhaps most noteworthy - a promise from the district to hold their positions while they were abroad. Over the years, at least 13 Val Verde employees left the district to work at Pegasus.

By February 2018, Val Verde and Pegasus signed a memorandum of understanding to further formalize their relationship: In return for receiving diplomas from Val Verde, Pegasus agreed to bring 10 students from the district to China each year for only $300, with all other expenses paid by the private school. The agreement also provided for McCormick and two Val Verde board members to travel to China for the annual grand opening event, to observe class instruction, and to award diplomas at graduation - with travel, lodging, and meals paid for by Pegasus. The memo explicitly stated that Torlakson was in full support of the arrangement.

Two former Val Verde board members who voted to authorize the relationship with Pegasus said that they felt the district benefited from the arrangement because of the opportunity for Val Verde students to participate in the international exchange program, and that they were reassured because of Val Verde's long-standing relationship with Long, who previously served as the Riverside County Superintendent of Schools.

"My impression was that it was unusual...for a California school to provide diplomas to foreign students," Suzanne Stotlar, one of those board members, acknowledged. "But...the idea was to foster international cooperation between our two countries, and I'm in favor of that."

The Val Verde Unified School District declined to comment for this story.

READ OUR FULL STORY: Insider investigation reveals officials helped sell access to California public schools to Chinese elite