DOJ Launches 'Operation Ghostbusters' Against 'Ghost Student' Aid Fraud: More Than 40 Cases, Five Indictments and $750,000 in Seized Crypto Tied to Kenya

Federal prosecutors say organized rings have been using stolen identities to enroll people who do not exist in college, then keeping the federal aid. Fox News reports the Justice Department announced the crackdown at a Thursday news conference.

The operation. It is called "Operation Ghostbusters." Assistant Attorney General Colin McDonald said it covers more than 40 open cases across 26 FBI field offices. So far there are indictments against five defendants and an international seizure of more than $750,000 in laundered cryptocurrency tied to networks in Kenya. Investigators estimate the scheme has run since 2021 and could have cost taxpayers "potentially several hundred million dollars."

How the scheme works. McDonald said syndicates steal the identities of working Americans who never applied to college and use them to enroll fictional "ghost students" at schools nationwide. If the Education Department approves the aid, it goes to the college. After tuition and fees come out, he said, the leftover money goes into accounts the fraudsters control and then often overseas, "to places like Kenya." Prosecutors say it moved through domestic "money mules" and fronts including a Nairobi safari company. He said some rings use artificial intelligence to fill out applications and complete coursework, and some even create the appearance of a fake student in an online classroom.

The victims. McDonald described an American who finished high school, went straight to work, never applied to college and one day finds his name on a loan from a school hundreds or thousands of miles away. "His credit is now at risk and his name is on the bill," he said. He added that the department has already sent a team to Kenya.

The blame. McDonald said the fraud began in 2021 under the Biden administration and that the investigation began in earnest in April. Under Secretary of Education Nicholas Kent said the Biden administration "had turned off nearly every fraud detection measure." He put the federal student loan portfolio at about $1.7 trillion, "like turning off fraud detection efforts at Wells Fargo."

"These are not isolated errors," McDonald said. "This is organized fraud at scale."

Note for readers: the dollar figure is a DOJ estimate, and the people charged are presumed innocent unless convicted. The blame on the prior administration is the officials' account, which we have not checked. Fox notes related reports on a Treasury finding of $270 million in suspicious activity and a government ID requirement for aid applicants.