I don't know how often it happens, but I have heard it enough to be confident that it does. There was a school out West under a previous coach that was notorious for this - including with some of their better players. They'd bring in a new recruit and then later corner some of the current players with - 'We need part of your scholarship to pay for that guy - what, don't you wanna go to Omaha? This guy will get us there.'
Sometimes I think it means the coach doesn't want you anymore, other times its like the scenario above.