It sounds like a lot of this case is going to come down to whether or not the students were actually told that the university was fake. One of the plaintiffs claims that he was repeatedly told over the course of multiple calls and months that classes would be starting and he’d get a normal course load, while ICE claims that it was made to clear to all students that it wasn’t a real university (i.e. a “pay to stay” arrangement).
I obviously have my doubts about ICE, but if they were any kind of smart they should have phone recordings or emails proving that’s the case. And if it is, they can likely keep the money in the same way that undercover drug busts do.