Are you seriously making people code for you for free?
An internship doesn't mean free labor. Although I guess there are some people who do try to get people to code for free and call it an "internship" or "portfolio building experience", that's not what I do.
Where I work, we hire college students as interns, where they learn how to do test-driven web development using Ruby and JavaScript. They get to work with student data and records and it's a really great program. The students land excellent paying jobs and have access to a network of former interns who from time to time offer advice and sometimes share code.
I hate unpaid internships. I wouldn't want to work for anyone for free. I also hate that companies that could pay for interns don't simply because they can get away with filling their intern slots with kids who will work for free. I hate that the disparity between what companies give unpaid interns and paid interns dillutes the value of gaining a paid internship.
And most of all I hate that unpaid internships are only available to those with parents footing all of their bills so they can afford to not get paid for the whole summer.
But you mentioned below that your interns are getting paid so I think he is attacking you for something you aren't doing.
(I worked in a similar place in a past life)
Or, more importantly (as this is the legal razor): Do you derive profit/gains from the work they do?
Honestly from the sound of it you're deluding yourself, and are in fact, just another internships-mean-free-labor guy trying to make yourself feel better with talk of 'connections' and all.
Not quite sure what you're getting at here. This is no different than a paid internship at Microsoft or Google, or many other companies in the midwest, just on a smaller scale.
"Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek"
We do all of that.