I am not a lawyer and not completely familiar with the scenario you describe but if any rules are being broken, I'd say their rear-ends should be dragged to a federal penitentiary. I wouldn't mind seeing existing laws enforced or new ones brought into place to tackle fraud, if that is what was involved in the case of your friend. I couldn't tell whether it was fraud or a loop hole being exploited. In any event that appears to either be an exception or a loop hole based on the information so far. The whole H-1 system, while not without fault, is not one big scam by any means. Chances are it would have been shut down a long time ago if it were. In fact most small businesses face the same issues as the big one when it comes to the quota problem as they run against the same ceiling. And it ultimately boils won to one thing: the reason there is such a big demand for H-1Bs is because their is a demand for the skills of these workers whether in big or small firms. The focus, in my opinion, should be to scrap the ceiling altogether and let demand and supply take their course. That would make a lot of economic sense but it will in all likelihood not pass political muster. Instead of being driven my marginal constituents and interests groups, Congress should look at this as an issue of "free markets and free people" - to borrow the phrase from the WSJ. The H-1 cap hurts US businesses and appears to exist only to placate political interest groups IMHO Just my thoughts.