People who never attended college can be left with student debt for degrees they never signed up for after their identities were used to seek federal aid.
The Justice Department says five people were charged as part of its first broad federal crackdown on “ghost students”, an alleged scheme that used stolen US identities and artificial intelligence to enrol fictitious students in colleges and divert federal student aid.
Francis Mogambi, a Kenyan national who arrived in the United States in May 2024 after winning the Diversity Visa lottery, was indicted by a Nebraska grand jury on 19 October 2026 on five counts of theft of government money and five counts of aggravated identity theft.
Prosecutors allege the scheme had been running since at least 2021, when fraudsters began stealing the identities of US citizens, especially high-school graduates who went straight into work rather than college. Some stolen personal information was sold online for between $4 and $8.
Between November 2025 and May 2026, prosecutors say Mogambi worked with associates in Kenya to use those identities to enrol fictitious students at American colleges. Artificial intelligence was used to complete applications and coursework, creating the appearance that students were attending virtual classes.
The result was a stream of fraudulent refund payments into US bank accounts. Investigators say money mules opened bank accounts across multiple financial institutions to receive hundreds of deposits before moving the money through thousands of transactions to Kenya.
Three defendants, Mabed Utate-Alberto, Patricia Perez and George Mendez, were charged in New Jersey with acting as money mules who opened accounts used to send about $1.3 million to Kenya. Prosecutors allege Mogambi kept 30% of the aid payments he diverted and sent the rest to associates in Kenya, earning $2,000 a week, according to court documents.
A phony safari company in Kenya banked stolen proceeds sent overseas, investigators said. The Justice Department seized more than $750,000 in cryptocurrency from a network associated with Kenyan nationals, working with Kenyan law enforcement.
Two Kenyan citizens were indicted in Nebraska and Virginia. US officials travelled to Kenya in September to work with local law enforcement on extraditions, prosecutions and recovering money.
The Department of Education, or DOE, has identified over 830,000 potentially fraudulent federal student aid accounts made with the personally identifiable information of US citizens. The Justice Department said losses could come close to $130 million if those accounts all belong to ghost students, while more than $32 million in actual losses has been identified in connection with the specific subjects.
In California, nearly 1/3 of community college applications submitted in 2024 were reportedly flagged as fraudulent. The figures show how easily a stolen identity can be made to look like a legitimate student on a screen.
On 29 October, Assistant Attorney General Colin M. McDonald announced the first charges against five defendants in Operation Ghostbusters. McDonald said officials would pursue those who steal American identities, taxpayer dollars and programmes meant to help students, including in Nebraska, New Jersey, Virginia and Nairobi.
First Assistant US Attorney Theophani K. Stamos said the Eastern District of Virginia had sent approximately 50 referrals to 26 FBI field offices across the country. More than 40 investigations remain open across those 26 field offices.
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