The nearly two dozen defendants knew the University of Northern New Jersey was a sham with no instructors, classes or degree programs, officials said.
But they were unaware the school was a creation of Immigration and Customs agents.
Paul Fishman, US attorney for New Jersey, told reporters that once word got out about the bogus school, the visa brokers and recruiters descended.
During one secretly recorded conversation, Fishman said, a conspirator said the practice has been going on for years.
Most of the defendants, who Fishman said are in the US legally, live in New York, New Jersey and California.
They are charged with conspiracy to commit visa fraud and conspiracy to harbor aliens for profit.
They were scheduled to make initial court appearances today.
Most of the foreign nationals who benefited from the alleged scheme hailed from China and India and were already in the US on non-immigrant student visas.
They have been identified and will be dealt with by immigration authorities but won't be prosecuted, Fishman said.
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