By default iRODS rule, when an iRODS user or group created
a /yourZone/home/yourUser or /yourZone/home/yourGrp
collection created.
In your case, you don't want to have /vhub/home/testgroup
you can remove this, using iRODS admin account by doing:
./ichmod -M own rods /vhub/home/testgroup
./irm -r /vhub/home/testgroup
so the /vhu/home/testgroup removed and 'testgroup' still exists
./iadmin lg (should still showing 'testgroup' )