US charges five, seizes US$750,000 in 'ghost student' aid fraud linked to Kenya

The US Justice Department said on 29 October 2026 that it had charged five people and seized more than US$750,000 in cryptocurrency from a Kenyan national's account, the first results of a nationwide investigation it calls Operation Ghostbusters. The Star put the seizure at KSh 97.44 million.

According to the department's press release, criminals used the stolen identities of US citizens to open fraudulent accounts on the Free Application for Federal Student Aid (FAFSA) and enrol "ghost students" in colleges. After loans and grants were paid out, the refunds were diverted to bank accounts controlled by foreign actors, with the help of US-based money mules, "including Kenyan nationals".

Many of the victims, all Americans, have only a high-school diploma and were shocked to learn of their supposed attendance at a school hundreds of miles away. The "ghost students" never attended the classes the money was awarded for.

Assistant Attorney General Colin M. McDonald, who heads the department's National Fraud Enforcement Division, said: "Whether you are in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you." The seizure was the first international seizure of its kind in the division's history.

In Nebraska, a federal grand jury returned a 10-count indictment on 19 October against Francis Mogambi, a Kenyan citizen, on five counts of theft of government money and five of aggravated identity theft. Prosecutors say that between November 2025 and May 2026 he worked with associates in Kenya to steal identities, enrol the victims in colleges and redirect the aid payments to himself, keeping 30 per cent and sending the rest to Kenya. The court detained him pending trial. He arrived in the United States on 15 May 2024 after winning the Diversity Visa lottery and was issued a permanent resident card. The intended loss in his case is US$20,000.

In the Eastern District of Virginia, a federal grand jury returned a multi-count indictment on 21 October against an unnamed Kenyan national for conspiracy to commit wire fraud and student aid fraud. The indictment says the defendant, acting as a money mule, received more than 700 fraudulent refund deposits totalling about US$1,439,548 and moved at least US$1.3 million to accounts in the United States and Kenya.

In New Jersey, three people were arrested on a criminal complaint (case 26-16210). They are accused of conspiring with people in Kenya, from about March 2021 to at least January 2026, to obtain more than US$1 million in federal student aid. They allegedly received the money in US bank accounts and, after taking their cut, sent it to co-conspirators in Kenya associated with a purported Kenyan safari company. Two of those co-conspirators are in Kenya, and the government says it will seek to charge them. The intended loss is put at US$1.5 million.

The fraud, which has run since at least 2021, is estimated at well over US$200 million. There are more than 40 open cases across 26 FBI field offices and more than 20 US Attorneys' Offices. In September and October investigators identified 830,840 potentially fraudulent federal student aid IDs tied to nearly US$130 million, and recommended that the Department of Education disable them.

Heith Janke, assistant director of the FBI's Criminal Division, said the bureau has identified more than US$32 million in losses in similar schemes, with millions more suspected. First Assistant US Attorney Theophani K. Stamos of the Eastern District of Virginia said the FBI Richmond cyber squad, working with the Education Department's inspector general, has found hundreds of participants and sent about 50 referrals to FBI field offices.

The department worked with Kenya's Directorate of Criminal Investigations, Assets Recovery Agency and Office of the Director of Public Prosecutions. Officials from the division and its partner agencies visited Kenya in September to promote extradition, prosecution and the return of stolen assets, and the cryptocurrency was seized with help from Kenyan law enforcement. The Justice Department's resident legal adviser in Nairobi is also assisting.

An indictment or complaint is only an allegation, and all defendants are presumed innocent until proven guilty. The release does not name a lawyer for Mogambi. Anyone in the United States who believes they are a victim can report to the Education Department's inspector general at oig.ed.gov/oig-hotline/complaint-form; the FBI has sent letters to many identified victims.