Shoaib Ahmad Shaikh, also the chief executive officer (CEO) of Axact, was taken into custody by the Federal Investigation Agency (FIA) officials from his Karachi office.
Local TV channels showed Shaikh being held by two officials and taken away in a white vehicle. The FIA team was led by director Shahid Hayat.
Mr Hayat told reporters that several cases have been registered against Shaikh and his employees for illegal and criminal activities.
He and seven other directors of the company were produced before a court which handed them over to the FIA for a physical remand till June 7.
The scandal came to light after the New York Times in a major story alleged that Axact was running 370 websites and issuing fake degrees to people from Gulf to the US.
According to the report, Axact has set up an elaborate network of hundreds of websites for fake universities with names like "Columbiana" and "Barkley", complete with paid actors who appeared as faculty members and students on promotional videos.
Shaikh yesterday asked the Sindh High Court to grant him a protective bail but the court turned it down as there was no case registered against him.
Officials said that FIA has gathered enough evidence to file a case giant Shaikh and prosecute him.
The FIA is also investigating a UAE-based company which holds a major chunk of shares in Axact for money laundering and illegal transactions amounting to millions of dollars.
Pakistan has already asked America's FBI and the Interpol to assist in the probe.
Axact was recently in news for launching Bol television as it was hiring journalists and media experts at exorbitant salaries.
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