Highly illegal and HIGHLY common. When my wife moved here (I uprooted her career because of our marriage), she spoke to a few of these people. It was way easier to get an illegal job, and better green card prospects (don't know why).

> I uprooted her career because of our marriage

This is a huge problem by itself. H-4 EAD after I-140 is not enough because that forces you to stay with your current employer until you get your I-140. If you are going to restrict H-1B to highly skilled immigrants, then H-4 EAD should be eligible for any H-1B holder's spouse regardless of I-140 status. Otherwise you are basically saying "we only welcome highly skilled immigrants that are single"

Things are much better these days with proprietors, HR folks and lawyers of these firms getting jail sentences.

Many of them? I saw a couple in the news, so there is a general push in the right direction I guess.