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The United States Justice Department has announced the first indictments in a nationwide investigation called Operation Ghostbusters, a student-aid fraud scheme in which criminal actors used stolen American identities to enrol fake students, known as ghost students, at colleges and divert federal aid money overseas.
Assistant Attorney General Colin M. McDonald, of the department's National Fraud Enforcement Division, announced the action at a news conference on Thursday, October 29, saying the department is charging five defendants and has seized more than $750,000 in cryptocurrency tied to the scheme through a network associated with Kenyan nationals. The department described it as the first international seizure of its kind in Kenya.
According to the Justice Department, the scheme worked by creating fraudulent Federal Student Aid accounts, known as FAFSA accounts, using stolen United States citizen identities to enrol ghost students in educational institutions. After loan and grant money was paid out, the refunds left over after tuition and fees were diverted to bank accounts controlled by foreign actors, helped by United States-based money mules, including Kenyan nationals.
McDonald said the fraud is organised and large-scale, not a series of isolated errors. He said some operators now use artificial intelligence to fill out college applications and complete coursework so it looks as if the ghost student is attending classes, and some even create the appearance of a fake student in an online classroom to trick schools into believing a real person is present.
Investigators believe the fraud has been running since at least 2021 and could have cost taxpayers several hundred million dollars. The operation spans more than 40 open cases across 26 FBI field offices and more than 20 United States attorney's offices, working with the FBI, the Department of Education, United States Customs and Border Protection and the State Department. A department team has been sent to Kenya to work on the scheme on the ground there.
In Nebraska, a grand jury indicted Francis Mogambi earlier this month on charges of theft of government money and aggravated identity theft. Prosecutors say Mogambi worked with associates in Kenya to steal United States identities and enrol people in college without their knowledge, then redirected federal aid payments to himself and co-conspirators in Kenya.
Last week, Mabed Utate-Alberto, George Alfau Mendez and Patricia Perez were arrested on charges of conspiracy to commit wire fraud. The group is accused of siphoning more than $1.5 million in student loan funds into Kenyan bank accounts, according to reporting on the department's announcement.
McDonald said that in California, nearly one-third of community college applications submitted in 2024 were flagged as fraudulent, and the FBI has so far identified more than $32 million in losses in similar student aid schemes, with millions more suspected. People whose identities were used are left with damaged credit and bills for degrees they never pursued.
An indictment is an allegation, not a conviction, and the defendants are presumed innocent unless proven guilty in court.