DOJ Charges Five in ‘Ghost Student’ Scheme That Sent Federal Student Aid to Kenya
The Justice Department on Thursday charged five people in a nationwide “ghost student” scheme that used stolen American identities to collect federal student aid, much of it sent to Kenya.
The charges are the first results of Operation Ghostbusters, which the department says has uncovered fraud dating to at least 2021. Estimated losses run “well over $200 million,” according to the announcement.
“These are not isolated errors. This is organized fraud at scale,” Assistant Attorney General Colin McDonald, who leads the department’s new National Fraud Enforcement Division, said at a news conference in Alexandria, Virginia.
The scheme worked by filing federal aid applications for fake students using personal data stolen from real Americans, often people who never attended college. After tuition and fees were paid, leftover aid refunds landed in accounts the fraudsters controlled.
McDonald said some rings use artificial intelligence to fill out applications and complete coursework. Some even create “the appearance of a fake student in an online classroom to trick schools into believing a real person is present,” he said, USA Today reported.
He described one victim, a high school graduate who went straight to work and never applied to college.
“One day, he finds his name attached to a loan from a school hundreds or thousands of miles away,” McDonald said. “His credit is now at risk and his name is on the bill.”
Cases in Three States
In New Jersey, three alleged money mules, Mabed Patricia Utate-Alberto, Patricia Arisleydi Perez and George Arturo Alfau Mendez, were arrested on a complaint accusing them of moving more than $1 million in aid to associates of a purported Kenyan safari company.
In Nebraska, Kenyan citizen Francis Mogambi was indicted Oct. 19 on five counts of theft of government money and five counts of aggravated identity theft. Prosecutors say he kept 30% of the proceeds and sent the rest to Kenya.
Mogambi arrived in the United States in May 2024 after winning the diversity visa lottery and received a green card shortly afterward. A judge ordered him held pending trial as a flight risk and a threat to the public.
In Virginia, a grand jury on Oct. 21 indicted a Kenyan national, whose name remains under seal, who allegedly received more than 700 fraudulent aid refunds totaling about $1.44 million.
With help from Kenyan police, investigators seized more than $750,000 in cryptocurrency from a Kenyan national tied to the scheme. The department called it the first international seizure of its kind in the Fraud Division’s history.
Investigators this fall also flagged 830,840 potentially fraudulent federal student aid accounts linked to nearly $130 million and asked the Education Department to disable them. The FBI has tied more than $32 million in losses to specific suspects, WJLA reported.
The probe began at the FBI’s Richmond field office and now includes more than 40 open cases across 26 FBI field offices and more than 20 U.S. attorney’s offices. McDonald called the first charges “just the beginning.”
Education Under Secretary Nicholas Kent blamed the prior administration. “When we walked in the door last January, we were extremely troubled to find that the Biden administration had turned off nearly every fraud detection measure,” he said.
Kent said the department has since blocked more than $2 billion in attempted student aid theft. “Every dollar that falls into the hands of a fraudster is a dollar that will not go to a student in need,” he said.
McDonald warned that more cases are coming. “Whether you’re in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you and bring you to justice,” he said.
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