In one San Gabriel neighborhood, investigators said pregnant Asian women paid $35,000 each to come to the U.S. to give birth. Most of the pregnant women were Chinese who are legally restricted to the number of children they can have in China.
When police and city officials entered the buildings, they found seven infants and several pregnant women. There were closets that had been turned into bathrooms.
"So they would have people coming in and out. If one would finish their pregnancy, another pregnancy would come in," said neighbor Martin Reyes.
Reyes and his friend say they were suspicious when they saw several pregnant women come and go in the three years they have lived on Palm Avenue.
Neighbor Taylor Alderson says there were expensive cars, like Mercedeses and Porsches parked out in the street.
Most of the pregnant women were Chinese, who are restricted by China to the number of children they can have.
Several babies were being cared for in the kitchen area of one of the illegally converted units. All apparently were born in local hospitals.
"Either they were coming in so that they could have more than one child, or they were coming in to have a child that would be an American citizen," said Alderson.
"Man, they had a lot of diapers coming out of that house," said Reyes. "We've seen boxes upon boxes one day."
There was even a bed in a garage. Seventeen rooms were used for new mothers.
The city ordered the operation shut down.
The owner was fined $800 for having a business in a residential area. It is the third time he's been fined for similar violations. Eyewitness News was unable to contact the owner.
The former residents have apparently left the U.S.
According to Immigration and Customs Enforcement (ICE), unless there is fraud involved, there is nothing illegal about pregnant women coming to the U.S. to give birth.