California condemns 'unlawful' claims by Chinese school at center of Business Insider report

• Pegasus California School has been the focus of a federal investigation and a blistering audit.
• It has claimed it was founded with the backing of the California education department.
• The state says that's not true and demanded it stop.

California's education department has demanded that a Chinese boarding school stop claiming it was founded with the "blessing and support" of the agency following a Business Insider report.

Pegasus California School is a private high school in Qingdao that costs thousands of dollars to attend and promises admittance to top U.S. universities. The school was the subject of a federal investigation and scathing state audit prompted by a 2021 Business Insider story on its ties to a California school district and state education officials.

The audit released last month by the Riverside County Office of Education found "sufficient evidence" of "fraud, misappropriation of funds, or other illegal fiscal practices," and referred its findings to the county prosecutor and other authorities.

Last month, Business Insider asked the California Department of Education about a claim on the Pegasus website that it was founded "with the blessing and support of the California Department of Education, to become the first and only high school in China that offers authentic California education." The website also describes how Pegasus offers its students a "true California-style instruction."

In response, the state agency sent a cease-and-desist letter in late March to the school, China's top market regulator, and the U.S. China Business Council.

California's Business and Professions Code Section "makes it unlawful for a non-governmental entity to use a state government name in a manner that could reasonably be interpreted as implying connection, approval, or endorsement by the state government," Len Garfinkel, the department's general counsel, wrote in the letter.

"You are on notice that the California Department of Education is not connected to, does not approve and does not endorse Pegasus California School," Garfinkel added.

Following Business Insider's inquiry, Steven Ma, Pegasus California School's founder, said that he has asked the school's administration to begin updating the website.

Pegasus changed the English version of its website to say that it was founded "with the blessing and support from the former California State Superintendent of Public Instruction." As of Thursday, it still mentioned the department on the Chinese version of the site, saying it was "authorized by the then-Secretary of Education of the California Department of Education."

Ma told Business Insider that the school administrator told him that "there is not a direct equivalent to the role of 'State Superintendent of Public Instruction' within the Chinese provincial governmental structure. As a result, in translation, it may have been rendered more generally as 'head of the California education department.'"

He added that, "the school will continue its review of all public-facing materials to ensure that language across different versions is clear, consistent, and does not create any potential for misunderstanding."

A California Department of Education spokesperson told Business Insider that "we're looking into this latest update."

Business Insider's 2021 investigation revealed that current and former state officials — including Tom Torlakson, who at the time was the state superintendent of public instruction, and David Long, a former California education secretary — worked closely with Pegasus' founder, a businessman named Steven Ma, to set up the school.

Wealthy Chinese students who attended Pegasus enjoyed perks that included California high school diplomas from the Val Verde Unified School District and a leg up in the cutthroat University of California admission process, the reporting found.

Torlakson, for a time, was also listed on Pegasus' website as the school's chief principal. "Going forward, I will use my personal connections in our education communities to promote Pegasus California School," a message attributed to him on the site said.

In response to that report, the California Department of Education in 2021 referred the matter to the state Attorney General's office and the Fair Political Practices Commission.

A spokesperson said it was "imperative that these serious allegations of misuse of state funds and conflict of interest during or after," Torlakson's term be reviewed by the appropriate outside agencies.

The recent audit found evidence that Torlakson and Long may have received benefits related to Pegasus.

For instance, the audit found that Ma, through his college consulting company ThinkTank Learning, made $13,600 in political contributions to Torlakson's 2014 campaign to be elected as superintendent. The auditors cited that as "evidence of potential bribes and/ or kickbacks."

The report also found that Torlakson's office had "raised concerns about representations that the CDE would partner or endorse official California schools in foreign countries."

Torlakson was unavailable to comment, according to a family member.

Ma previously said that "any political contributions referenced were lawful, publicly disclosed, and not connected to any official actions. I have never participated in or been aware of any bribery, kickbacks, or improper arrangements."

As recently as 2024, according to Pegasus' WeChat channel, UC Irvine offered a summer school program specifically tailored to its students.

Sheri Ledbetter, a UC Irvine spokesperson, confirmed that Pegasus students visited UC Irvine as part of a two-week international high school program, which included students from several international institutions.

"We no longer host international minors as part of UC Irvine's continuing education programs, and do not have a continuing relationship with Pegasus," Ledbetter said.

On the Pegasus website, Ma is described as a member of the University of California Regents Selection Committee. In one post, referencing Ma's UC affiliation, students were encouraged to meet with him to learn application strategies and secure offers from top U.S. universities.

"To our knowledge, he's not on such a committee," Stett Holbrook, associate director of strategic and critical communications for the University of California Office of the President, told Business Insider in response to Ma's claim.

"The University of California does not convene a Regents selection advisory committee," Holbrook added.

Ma told Business Insider that "To the extent any wording on the Pegasus website could be interpreted as suggesting a formal or ongoing committee role, that language will be reviewed and clarified as appropriate."

While Pegasus marketed itself as a California high school in China, Business Insider previously reported that it failed to receive accreditation from the Western Association of Schools and Colleges, which accredits California schools, and it also didn't offer the "A-G course list," a program of courses required for California students to gain admittance to UC schools.

In 2018, Evera Spears, a former associate director for the University of California's Office of the President, contacted the admissions directors at all nine undergraduate UC campuses to remind them that Pegasus was "not WASC accredited; does not have a UC A-G Course List." She added that any Pegasus students accepted into any of the UC schools must be designated an "Admission by Exception," the system's term for students who show promise but don't meet the admission requirements.

A few months later, the director of admissions for UC Santa Barbara wrote to Spears that "It's off putting that they are using terms like A-G Approved course list," and that "I feel badly for families who can easily be led to believe that this program is endorsed by the UC system."

Pegasus continues to claim online that it offers "California's A-G curriculum."

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