I have tried to research this question on USCIS Home Page and then called the 1-800 number and got two answers on two different calls.

1. Its not a problem, after the marriage just fill out a series of forms, I-130 petition for alien relative, I-485 application to adjust status, I-765 application for employment authorization, G-325 biographic information and its OK.

2. I could be subject penalties and it is considered fraud.

What is the answer and why is it not clear cut?

One hand if it is not possible, why is there a procedure for when it happens?
If it is possibe, why are there threats of penalties?

Both are correct.. actually this is somewhat sensitive. If an alien enters US and gets married immediately, this may be a red flag for immigration when the couple apply for green card. However, if you can prove the marriage is genuine, not immediate, plus evidence of relationship, etc. It may be fine...

In short, don't get married within 90 days from date or arrival, and have experienced immigration attorney take care of paperwork for you.

Good luck...