The United States Department of Justice has charged five individuals in a nationwide investigation into an alleged student financial aid fraud scheme linked to Kenyan networks, in which stolen American identities were reportedly used to register fictitious students at colleges and universities to obtain millions of dollars in government funding.
Investigators believe the scheme has been operating since at least 2021, with the wider fraud estimated to exceed Ksh25.8 billion ($200 million).
Announced on Thursday, October 29, 2026, the investigation, dubbed Operation Ghostbusters, has also resulted in the seizure of cryptocurrency worth more than Ksh96.7 million ($750,000) from an account belonging to a Kenyan national allegedly connected to the network.
“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,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division.
"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,” he added.
The Federal Bureau of Investigation (FBI) said it had uncovered more than Ksh4.1 billion ($32 million) in losses linked to similar ghost-student fraud schemes, with investigators suspecting that the actual amount could be significantly higher.
How the alleged student-aid fraud scheme operated
According to the Justice Department, the network allegedly relied on stolen personal information belonging to American citizens to submit fraudulent applications for federal financial assistance through the Free Application for Federal Student Aid (FAFSA) system.
The stolen identities were subsequently used to register fictitious students at American colleges and universities, enabling the suspects to access government-backed student loans and grants.
Once the institutions deducted tuition fees and other charges, the remaining money was allegedly deposited into bank accounts controlled by the suspects or transferred to associates based overseas.
The Justice Department outlined separate cases filed in three federal districts: Virginia, Nebraska and New Jersey.
In Virginia, a Kenyan national was indicted on October 21 over an alleged operation involving more than Ksh180.6 million ($1.4 million) in student financial aid.
Prosecutors claim the suspect received more than 700 fraudulent student-aid refund deposits amounting to approximately Ksh185.7 million ($1.44 million). At least Ksh167.6 million ($1.3 million) was allegedly transferred to bank accounts in the United States and Kenya.
In Nebraska, Kenyan citizen Francis Mogambi was indicted on October 19, facing five counts of theft of government money and five counts of aggravated identity theft. Prosecutors allege that Mogambi used stolen identities to fraudulently obtain student financial assistance between November 2025 and May 2026. He reportedly retained 30 per cent of the proceeds while transferring the remaining amount to associates in Kenya.
Meanwhile, three other suspects were charged in a separate case in New Jersey over an alleged scheme involving more than Ksh129 million ($1 million) in federal student-aid funds.
According to the Justice Department, the suspects allegedly received the money through American bank accounts before transferring portions of the proceeds to their co-conspirators in Kenya.
US identifies more than 830,000 suspicious accounts
The investigation has since widened beyond the five individuals facing charges, with authorities uncovering hundreds of thousands of potentially fraudulent accounts.
The Justice Department revealed that investigators identified 830,840 potentially fraudulent Federal Student Aid identification accounts associated with nearly Ksh16.8 billion ($130 million) during September and October 2026.
Authorities subsequently recommended that the US Department of Education disable the flagged accounts as investigations into the alleged network continue.
The FBI is working alongside other American government agencies and Kenyan law enforcement partners to investigate the suspected operations, recover funds and identify additional individuals who may have been involved.
The Justice Department emphasised that the charges remain allegations and that all the accused are presumed innocent until proven guilty in a court of law.
