Fight it.
I agree you should keep fighting and go above the department chair’s head. I like the idea of contacting your state representative. Contact the Ombudsman, contact the President of the University, and do all of these in writing, cc:ing the department head. I also agree with contacting ABET and I would also contact WASC, explain your situation and ask about how to file a formal complaint in writing. Also make sure you explain in writing to all of the above about losing the scholarship monies because of SDSU. I think that’s a key point. Also contact a lawyer.