Qingdao is a very corrupt city to live in, and the visa laws are loose there because of this, so maybe it is true that there, and some few other places, that the local authorities can still get people Z visas. In most cases though you do have to leave mainland China, and sometimes even return to your home country.

As for the school, it sounds like a real dump, and I wish you could get out of there without any worries. There are places though which, while not 100 percent on the up and up, are decent to work for and will give you a job post haste within China.

As for the place having mob ties, it's quite likely. The mob in China is a lot more powerful then people realize, and English schools are not only a great way to make money, but also to launder it. It's a win win for the mafia. I would suggest not making too many waves to be totally honest, as it sounds like this schools boss and owners are pretty juiced up. If you want to make waves, wait until you are out of there and safe.

If you'd like I'll do what I can to help you find more work. I have been in China a long time, and have a lot of connections of my own if you are desperately in need of work. If your need is dire let me know and post some kind of way for me to get in contact with you privately.

You have to be very careful with some schools. Though not all are mobbed up, a lot are, as a school is a great way to launder money, and make it, all at the same time. This school being closed down seems rather unlikely to me, as it is supported from both above, by the cops, and below, by the mob. Your best bet is to set up a new job, and get the hell out of there. If you are in that great a need, I can help you with the job. I hope you have enough resources to at least get out and go somewhere else, a hotel maybe.

Let us know how you are doing OK.