Employer has agreed to sponsor GC, but has shown reluctance paying for it. I am fine with it and my idea is to have employer sponsor for it and me reimburse him by writing him a check for all expenses (including PERM)

My boss is a part of a company, but he runs his own business. So in reality the company is sponsoring me for GC, and I can write him a check (in his name) for all GC expenses.

I know this may not be legal, but what are the chances of getting caught in this?

You have answer in your query itself. You should not have shared such things in Sajha mitra.

No legitimate business will sponsor for GC and put the financial burden on the employee. It is simply illegal!!
So, looks like your employer is either shady Indian or such consultancy or some business run by the likes of such people. In such case, go and apply for it even if you have to pay for the application. There is some risk but many folks have got GC through such process.
Good Luck