Do you have any references to back this up? I would be interested in seeing them. Our lawyer (a well known technology partner at a large Vancouver firm: http://www.cwilson.com/people/10-profiles/69-brock-smith/pro...) had no qualms with this type of offer. Bit of an aside: in my experience unpaid internships can work out quite well for everyone involved, provided everyone is very unfront and transparent about expectations/abilities/mentoring to be provided.

edit: added link to Brock. He is awesome BTW, highly recommended.