The school has not been publicly named, but it has branches in Lünen, Hagen and Wuppertal, according to a report by public broadcaster ARD.
According to ARD, a special inquiry has been set up to look into charges that the school's two proprietors overstated the number of attendees in their courses in order to reap unwarranted state subsidies.
They also are believed to have given manipulated language exams to students that had answers to questions already marked in advance.
A further eight people are being investigated as alleged middlemen who sought out students to participate in the fake courses. Nearly 100 former students are suspected of having obtained language certificates – necessary for jobs, studying and naturalising as a German citizen – illegally.
“The number is expected to rise over the course of the investigation,” prosecutor Ina Holznagel told ARD.
A probe into the school has been ongoing since February of last year but culminated in December with a raid on the school branches and private homes throughout North Rhine-Westphalia.
Authorities were tipped off by immigration officials who realised some applicants for naturalisation were barely able to speak German despite having their language certificates.
ARD has previously reported that fraud is widespread at Germany's integration courses. It is common for proprietors to overstate the number of attendees in order to gain money from the state, the network reported.