Three people were arrested and two Los Angeles school campuses raided Wednesday as federal agents broke up an alleged "pay to stay" scam that enabled visitors on student visas to continue to stay in the U.S. even though they were not attending classes.
Documents and other evidence were seized from Prodee University and Walter Jay M.D. Institute, two vocational schools in the Mid-Wilshire area, where federal inspectors said they found a conspicuous absence of students when they visited.
"They found three in one class, one in another," said Claude Arnold, special agent in charge for Homeland Security Investigations in Los Angeles, about a 2011 visit to Prodee, which prompted the investigation. "That was a red flag something was up."
Prodee’s enrollment records allegedly listed some 1,500 foreign students, many from Korea and China, in what Arnold calls a classic "pay to stay" scam, in which a school charges tuition of between $1,500 and $1,800 to illegally extend a J-1 student visa, allowing the person to stay in the country with an ability to work.
"There is little or no teaching," Arnold said. "Virtually the whole student body pays to stay in the country."
"If you have 1,500 students, collect tuition twice a year, do the math … (that's) $6 million," Arnold said.
Hee Sun Shim, also known as Leonard Shim and Leo Shim, 51, of Beverly Hills, the owner and manager of the schools; Hyung Chan Moon, also known as Steve Moon, 39, of Los Angeles, who assisted with the operation and management of the schools; and Eun Young Choi, also known as Jamie Choi, 35, of Los Angeles, a former employee who assisted with the operation and management of the schools, were arrested Wednesday
Arnold said Prodee is a U.S.-based company. There is no indication that foreign governments were involved in the alleged deception and most enrollees were previously taking classes elsewhere.
"Our investigation found students already here under different visas," Arnold said. He said their investigation has not yet found any actual students of the school.
No one at either of Prodee’s two main locations answered calls seeking comment.
A third location in Alhambra, Likie Fashion and Technology College, remains open and was not part of Wednesday’s federal raid.
The three indicted executives are scheduled to appear in court Thursday.