WASHINGTON — The Justice Department has charged five people in three states and seized more than $750,000 in cryptocurrency in Kenya in the first results of a nationwide crackdown on "ghost student" fraud, the department said in a release on October 29.
The operation, called Operation Ghostbusters, targets fake college students created with stolen American identities to take federal student aid. According to the Justice Department, criminal actors created fraudulent Federal Student Aid accounts, enrolled "ghost students" who never meant to study, and, after loan and grant money was paid out, diverted the refunds to bank accounts controlled by foreign actors, helped by money mules in the United States. The department’s full announcement is on justice.gov.
In New Jersey, three people were charged by criminal complaint and arrested, accused of receiving student-aid funds in U.S. bank accounts and, after taking a share, sending the money overseas to co-conspirators in Kenya. In Virginia, a grand jury indicted one Kenyan national over more than 700 refund deposits totalling about $1,439,548, according to the department. In Nebraska, a grand jury indicted Francis Mogambi on October 19 on counts of theft of government money and aggravated identity theft.
Officials say artificial intelligence made the scheme harder to spot. Assistant Attorney General Colin M. McDonald said fraudsters used AI to complete coursework and create the appearance of attendance in online classes, so the fake students looked like they were genuinely studying and the aid kept flowing, according to the department’s announcement.
The scale investigators describe is much larger than the five cases charged so far. The department said teams identified 830,840 potentially fraudulent federal student aid IDs linked to nearly $130 million in September and October and recommended that the Education Department disable them. Those are suspected accounts, not confirmed ghost students. More than 40 cases are open across 26 FBI field offices and more than 20 U.S. attorney’s offices, according to the department.
The case began with a referral from the Education Department’s Office of Inspector General to the FBI’s Richmond field office. The operation is led by the Justice Department’s National Fraud Enforcement Division, working with the FBI, the Education Department, other federal agencies and Kenyan authorities. The cryptocurrency seizure was described by the department as the first international seizure of its kind in Kenya.
The charges are allegations. As the Justice Department itself notes, an indictment or complaint is merely an allegation, and every defendant is presumed innocent until proven guilty in court. The department says further enforcement actions are expected as the investigation continues. Students and families who think an aid account was opened in their name can check their record on StudentAid.gov and report identity theft through official federal channels.
