Quick Update:
FSGuide was not able to pull the information of the cell phone user unfortunately (reason why coming later). I did contact local PD and spoke to an officer and a detective. They too were unable to pull the information as it appears to be a VOIP number (more details below). Since there is not a person to charge with sending unsolicited pictures, I turned the conversation to needing to be an old school parent to parent discussion at this point.
I called the mom and spoke to her trying to give the kid the benefit of the doubt as facts were discovered. She claimed that the kid hadn't had his phone for 2wks, not true as he started the text group on Monday, 1wk prior. I spoke to her at length in regards to the details of the concerns I had. She also let me know that she had been contacted by at least one other parent that had a daughter in the text group. She was "momming" and protecting her kid and not truthful IMO, so I was not satisfied with our discussion. She was out of town on business and let me know that her husband, a Houston PD Detective, would be reaching out that evening for further discussion after he got home and was able to look into it himself.
He let me know that the kid had created a fake number in an app called "2nd line" in order to prank his friends with gifs and memes but had deleted the app a few months prior, which the dad was aware of that timeline and confirmed. The kid's phone is on full lockdown according to the father with a Google product that they pay for now (I cannot remember that detail as we are an iPhone family). He was able to see multiple texts from that same number to his kid with explicit sexual phrases, emoji combinations, and requests along with words in Korean randomly. What he believed, and me to an extent, happened, when he had the app, the contacts he messaged were saved as it was a spyware-esque app. Once he messaged that number, the number became live again or was already in use, and the user began sending inappropriate messages to the group and the kid. The line of texts and verbiage are just not something that I believe a 12yr old would know, but I am still not fully on board about the iteration of the events.
All in all, this was a huge eye opening experience for our 12yr old daughter and there are now new rules that she has to follow in order to keep her phone as is and some that she will not be able to have changed. I appreciate all the verbal support, this should be a situation that ends with a positive learning experience for us and our daughter as well as the other kids and parents involved. Our daughter was given the option to discontinue talks with the kid since he is no longer at the school and she chose to do so, which shows maturity and aligns with our wishes. She now knows the dangers are not just from outside, but can also be from "friends" numbers as well.
TLDR: Pic likely didnt come from kid, but an oversees app based user that spoofed or took over a VOIP number. Lessons learned and new rules in place in the bdgol07 household as protecting my kids is priority #1.