It's happening at virtually every large state school with many foreign students. The schools let them get away with it because of the absurd amount of $$$ they pay to go to school here. It's become a serious source of revenue for many schools and I think they're unwilling to part with it, especially with the way many states are cutting education spending.
The school won't investigate. They're getting money from students. This hurts your degree and job prospects when unqualified graduates get hired with fake GPAs