A year after the Tri-Valley university scam left several students from India high and dry, another American varsity with a significant Indian population, has run into trouble after its CEO was charged with visa fraud.

Jerry Wang, 34, the CEO of Sunnyvale California-based Herguan University and the University of East-West Medicine has been charged in a San Jose District Court with a 15 count indictment on visa fraud including that he forged federal documents to allow foreign students to enter and stay in the US.

Federal agents raided the Herguan University in California and arrested Wang on Thursday. Wang faces a maximum penalty of up to 85 years in prison if convicted of all charges.

He could also have to pay a fine of up to a million dollars. Wang's father and mother have also been named in the 10-page indictment, which alleges that between 2007 and 2011, they submitted false transfer letters and forged other visa documents required for non-immigrant students to the US Department of Homeland Security's Student and Exchange Visitor Programme (SEVP).

The Wangs collected tuition fees and other payments from Herguan students in exchange for maintaining their false student visa records.

The case could spell trouble for the about 450 students of Herguan, most of whom are from India. A photograph on the university's website shows some graduating students, half of whom are Indians.

The university however wrote on its website that the charges against Wang have not affected Herguan and that Wang has resigned from his post.

The university is "open and and conducting classes as usual. Government charges against the Designated School Official, who has resigned, regarding immigration issues, have not affected the University. Students will find classes scheduled as usual," it said.

The university added that if students have valid visa status 'nothing has changed for you'. The university is seeking Wang's replacement and has appointed Doreen Simmons as the Interim Chief Operating Officer.

The US Immigration and Customs Enforcement (ICE) said in a statement that in light of the allegations, Herguan and the University of East-West Medicine could lose authorisation to enroll foreign students.

"Foreign students who are currently enrolled at these universities may continue to attend classes as long as the schools remain SEVP-certified and the students are able to maintain their lawful immigration status," ICE said.

The ICE has issued both schools a Notice of Intent to Withdraw, the first step in revoking the schools' SEVP certification. The universities have 30 days to respond to the notice and request an interview to contest the action.

The indictment charges Wang with conspiracy to commit visa fraud; use of false documents; aggravated identity theft; and unauthorised access to government computers.

Wang made his initial appearance in federal court on Thursday and is scheduled to be formally arraigned August 20.

The school offers computer science and business degrees and was granted federal approval in 2008 to accept foreign students.

The San Jose Mercury News quoted a Herguan graduate Rajiv as saying that the news of the raid came as a shock.

He said foreign students were told if "that in the next 15 days, if something doesn't change, you either have to find a different school or leave the country."

Last year over 1000 Indian students were affected by the Tri-Valley scam after the university was raided and shut down by authorities on charges of a massive immigration fraud.

Many students had faced the threat of deportation to India after the scam was uncovered. Federal authorities had alleged that Tri-Valley had been paid millions of dollars by foreigners to obtain student visas that authorised them to remain in the US.