The US Department of Justice has announced the seizure of more than USD 750,000 (approximately KSh97 million) in cryptocurrency linked to a student loan fraud scheme involving Kenyan nationals.
In an announcement on October 29, Assistant Attorney General Colin McDonald said the operation was part of a nationwide investigation into a criminal network accused of using stolen American identities to fraudulently obtain federal student loans and grants.
“Today, we are announcing the first results of Operation Ghostbusters, a nationwide effort to stop a major fraud scheme targeting federal student aid, low-income Americans, and the American taxpayer,” he said.
Additionally, the White House stated that Kenyan nationals used stolen American identities to fraudulently obtain federal student aid, diverting the funds for personal gain.
“Kenyan nationals used stolen American identities to commit fraud by funneling federal student aid for their own personal gain and co-conspirators overseas,” the statement read.
How Kenyan Nationals Used Stolen US Identities to Steal Student Aid
The Justice Department said the suspects created fake Free Application for Federal Student Aid (FAFSA) accounts using stolen American identities to enrol non-existent students, known as ghost students, in US colleges and other educational institutions.
After the loans and grants were disbursed, the suspects allegedly diverted the refunds into bank accounts controlled by foreign actors, with US-based money mules facilitating the transactions.
The department, working alongside the US Attorney’s Offices for the Eastern District of Virginia, Nebraska and New Jersey, announced indictments against five defendants in connection with the investigation.
Assistant Attorney General Colin M. McDonald said the government had also secured what he described as the first international seizure of its kind in Kenya.
“The Department is charging five defendants and announcing the seizure of more than $750,000 in cryptocurrency tied to this scheme through a network associated with Kenyan nationals. This is the first international seizure of its kind in Kenya. If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build a future, we will find you. Whether you are in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you,” Colin added.
He added that the investigation was targeting individuals who stole American identities and exploited government programmes intended to support students from low-income households.
Also Read: Nine Kenyans Arrested Over KSh1.57B IFAD Programme Fraud
FBI Uncovers Millions in Student Aid Fraud
The Federal Bureau of Investigation (FBI) disclosed that investigators had identified more than $32 million in losses from similar ghost student schemes, with millions more suspected.
Assistant Director Heith Janke of the FBI’s Criminal Division said the suspects used stolen personal information belonging to American citizens to defraud the US government of millions of dollars.
Meanwhile, the US Attorney’s Office for the Eastern District of Virginia said investigators uncovered hundreds of participants and hundreds of millions of dollars in stolen funds through data analysis.
First Assistant US Attorney Theophani Stamos said the investigation had generated approximately 50 referrals to 26 FBI field offices across the country.
The Department of Education also reported saving taxpayers more than $2 billion in attempted student aid theft under President Donald Trump’s administration.
Under Secretary Nicholas Kent warned that fraudulent claims diverted resources meant for genuine students, adding that the government would pursue perpetrators operating both within and outside the United States.
Also Read: Kenyan Man Wamuigah Jailed in US Over Ksh1.6 Billion Fraud Scheme
What is US Operation Ghostbusters?
Operation Ghostbusters is a nationwide investigation launched by the US Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) to dismantle a large-scale federal student aid fraud network.
The investigation focuses on criminal actors who allegedly used stolen identities belonging to American citizens to create fraudulent Free Application for Federal Student Aid (FAFSA) accounts and enrol non-existent students in community colleges and universities across the country.
The suspects reportedly used artificial intelligence tools to complete applications, undertake coursework and simulate participation in online classes to make the fake students appear genuine.
After federal loans and grants were disbursed to the educational institutions, tuition fees were deducted before the remaining funds were refunded and channelled into bank and cryptocurrency accounts controlled by the criminal network.
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