A case working its way through a federal court in California has exposed huge student visa scams by "sham" universities cashing in on Indians and other foreigners looking for a quick path to jobs in the United States.

Enrollment at Tri-Valley University, an unaccredited self-styled Christian graduate school, surged from a handful of students to 1,500, almost all from India, in a two-year period before federal authorities shut it down in January.

The university's president, Susan Su, was arrested in May and charged with fraud, money laundering, harboring aliens and making false statements. Four others also have been charged in the case.

She is accused of submitting false documentation to get federal approval to sponsor students to the university on foreign visas, and then using it to sell visas to all comers for the price of tuition, $2,700 a semester.

State Department spokeswoman Victoria Nuland on Wednesday called it "a pretty horrible visa scam, where a fake university petitioned and got visas for a bunch of students to come over and then actually turned out not to be a real educational institution."

The case, which has yet to go to trial, has strained relations with India, whose press has portrayed the students as innocent victims suddenly at loose ends and under threat of deportation, their dreams dashed by the scam.

India's ambassador to the United States, Nirupama Rao, this week wrote US Secretary of State Hillary Clinton about the case, citing the hardships faced by the students and urging that their cases "be viewed in their totality with understanding and in a fair and reasonable manner," the embassy said.

Nuland said 435 of the students have been approved to be allowed to transfer to other universities, but the status of more than 900 others is still in doubt.

"Some students we're not going to be able place, but we're continuing to work on this issue," she said.

The TVU case comes at a time when many American colleges are eager to recruit students from India, where a burgeoning middle class and growing population is powering demand for higher education.

In 2009-2010, there were 105,000 Indian students in the United States, about 15 percent of the total international students here, according to a report by the Institute of International Education. Only China, with 128,000, had more.

But even with the rush for foreign students, TVU was unusual in that it had only foreign students, 95 percent of them from India.

It operated from a building in Pleasanton, California that had capacity for only 30 students when it opened in 2008, and yet the university grew by hundreds of students in its second year, according to court filings.

As the school's enrollment surged, Su bought a new Mercedes-Benz and a 1.8 million dollar home in Silicon Valley with the estimated 3.2 million dollars that flooded in, the government said.

There were other signs that something was amiss -- a university website rife with misspellings and grammatical errors, sketchy course listings, many of them taught by none other than the school's president and CEO, Susan Su.

When DHS agents finally raided the school they found that most of its students were dispersed around the country, holding jobs under the visa program's work-study provisions.

The residence where the university said more than half its students were living turned out to be a single apartment, according to the filings.

Prosecutors allege that Su gained certification to sponsor foreign student visas with a tissue of false information.

When DHS agents visited the school, she gave false information about "TVU's classes, instructors, DSO's, official staff and school policies," according to the April 28 indictment.

A database that DHS created after the September 11, 2001 attacks to keep track of foreign students was allegedly plied with false information. False letters of good standing, transcripts and attendance records filled out the picture, prosecutors allege.

"It is certainly a wake-up call," said Ronald Cushing, director of international services at the University of Cincinnati, an accredited university.

"I would be very surprised if anybody who has gone through the certification process since Tri-Valley has not been looked at more closely," he told AFP.

And indeed, other cases have surfaced since TVU.

A Miami woman who ran a language school in a strip mall was sentenced August 30 to 15 months in prison for sponsoring visas for foreign students who did not attend classes. In that case, 116 students were ordered deported.

On July 28, DHS agents raided the University of Northern Virginia, an unaccredited, little known, for-profit undergraduate and graduate school in the Washington suburbs with 2,400 students from India.

In reality, he told AFP, there was a disconnect between giving students work to do, which the school could tout, and "a true curriculum that involves some practical experience to round out the education.

"That's where the abuse came in," he added.

But Cushing said the key failing is the process by which DHS certifies schools, calling it "minimal at best" with inspections conducted by retired law enforcement officers, rather than academics knowledgeable enough to detect fraud.

DHS may have made some changes since TVU, he said. "But what I know has not changed is the length, the duration and the types of individuals they are sending out to do these certifications."