Cleveland fraud squad said one bogus training company is suspected of stealing pound;29m in contributions from people who signed up for courses which were supposed to attract further funding in the form of ILA subsidies. The company is suspected of stealing a further pound;5.8m directly from the Department for Education and Skills through the ILA system.
Seven other companies, also being investigated by Cleveland, are suspected of stealing pound;2.8m from the DfES.
The alleged fraud is thought to have affected 100,000 would-be students across England.
Extradition orders could be issued against some suspects. Detective Sergeant Phil Murphy said: "Some are no longer residing in the UK."
ILAs were scrapped in November 2001 amid allegations of fraud and abuse.