It is not fraud if Dr. Nyang'oro created these courses with the implicit or explicit approval of his superiors. True or not, that would be his best defense. If I had to guess, I would lean towards true. While department heads create course schedules and lineups, in universities with which I am familiar, those schedules and lineups still have to be approved by the Dean. The dean of a university college is not a purely titular figure like the Holy Roman Emperor and has an active role in university management. A course lineup with a lot of independent study courses and courses without meeting times or places ought to have raised some red flags. Course content and satisfying major requirements also implicate accreditation issues that the entire college has to manage. There are also budget issues and duplicative courses with low enrollments invite scrutiny. At the very least, the Dean’s Office probably knew or suspected that something was fishy about these courses although not extent of it: no coursework as opposed to nominal coursework. I would suggest that the reason Dr. Nyang'oro has been so talkative is that doing so tends to exculpate him. Otherwise, his attorney would tell him to clam up. Indeed, even if the charges were false, his attorney would still likely tell him to clam up before trial unless he could support his statements to police with other evidence.
I do not buy the rationale that one of the reasons for dropping the charges is that prosecuting Dr. Nyang'oro would not be worth the effort given the likelihood of a small sentence or probation before judgment. Such a consideration would have been readily apparent at the outset. Also, given the fact that it is unlikely that kind Uncle Julius created these courses for athletes on his own initiative, but rather at the request of or through the connivance of members of the Athletic Department, the entire purpose of prosecuting him in the first place would seem to be an attempt to find a scapegoat, a purpose for which a finding of culpability to any crime would be sufficient.
To be fair to prosecutors, indicting small fish in order to pressure them into inculpating people higher up in an organization is a standard tactic. However, in the absence of any further indictments against new people, I do not see any evidence of trying to climb the ladder, rather the opposite. I doubt that prosecutors ever meant their efforts to aid UNC’s own internal investigation or that they wished to get to the bottom of the matter themselves. If they did, they would have impaneled an investigative grand jury at the outset and stated issuing subpoenas.