The DOJ announced the first five indictments in an investigation into a large-scale student loan fraud scheme.
Colin McDonald, the assistant attorney general for DOJ’s National Fraud Enforcement Division, said the agency identified five Kenyan nationals who conspired to use Americans’ identities to enroll in colleges as “ghost students” to pocket student aid payments.
“The methods used in these schemes are increasingly sophisticated. Some use super intelligence to fill out college applications and complete coursework, so it looks like the ghost student is actually completing the class,” McDonald said at a news conference. “The goal is to keep the ghost student in school for as long as possible, semester after semester after semester, stealing money from the taxpayer.”
The investigation, referred to as Operation Ghostbusters, includes the Justice Department, U.S. attorneys’ offices, the FBI, the Department of Education, U.S. Customs and Border Protection and the State Department.
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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 U.S. identities and enroll individuals 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 over $1.5 million in student loans funds into Kenyan bank accounts.
And in Virginia, a grand jury indicted another Kenyan national last week with conspiracy to commit wire fraud and student aid fraud, the Justice Department said. The defendant in the still sealed case conspired to use the stolen identities of U.S. citizens to submit false federal student aid applications, resulting in over 700 fraudulently obtained federal student aid refund deposits and over $1.4 million stolen in student aid, prosecutors said.
The department seized over $750,000 from a cryptocurrency account tied to the scheme and laundered through a larger network, the DOJ said. McDonald said the scheme has likely been going on since at least 2021 and has resulted in “several hundred million dollars lost.”
Nicholas Kent, the under secretary of education, attributed the increase in student loan fraud to the Biden administration, who he said “turned off nearly every fraud detection measure.” He said the Education Department has created new tools in federal financial aid applications that require students to show an ID, an effort that has resulted in nearly $600 million in savings in six months and prevented more than $2 billion in attempted federal student aid fraud, Kent said at a press conference.
“Let me be very clear: every dollar that falls into the hands of a fraudster is $1 that will not only go to a fraudster, but not go to a poor or low-income student,” Kent said at the news conference. “We will not stand by as fraudsters rob opportunities from our students to learn, grow, and to thrive, and we will not allow international actors to pocket the money American taxpayers have entrusted us with.”
Lower-resource institutions, such as community colleges that have lower tuition and fees, are usually the target of fraud, Kent and McDonald said. Americans who have never been to college are also targets because their lack of a previous student aid application avoids alerting Education Department systems.
Heith Janke, assistant director of the FBI’s Criminal Division, said the agency has opened 45 investigations across dozens of offices involving “ghost students.” The agency identified over 830,000 potentially fraudulent student aid accounts created by using the personally identifiable information of U.S. citizens, he said.
“What is even more horrifying is that our victims did not even know their information and their PII was being used,” Janke said. “You could go completely unaware until that loan repayment notification came in, which could be years down the road.”
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