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Yeah, this is a bad scheme all the way around. As an employer of several foreign workers, I can say that you either need to go completely honest or do everything to hide it. If one of the parties can't or won't find a way to make this work, then you're SOL. However, the work rules for Canadians, especially in a case like this, are ususally a little more lax than they are for folks from the rest of the world. I'd see if she can apply to get a temporary work permit.
If your friend reports this as his income, it's potentially tax fraud, which is a very big deal. Whoever came up with this idea needs to go back to the drawing board.
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"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin
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"We have met the enemy and he is us." - Pogo
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