Assistant Attorney General Colin McDonald of the U.S. Department of Justice Fraud Enforcement Division has partnered with the White House Task Force, the Department of Education, and the FBI on a newly uncovered form of fraud called "Ghost Students."

On Thursday, McDonald held a press conference with Department of Education Undersecretary Nicholas Kent, First U.S. Attorney for the Eastern District of Virginia Theo Stamos, Assistant Director of the FBI Criminal Division Heith Janke, and Andrew Ferguson, Vice Chair of the Fraud Task Force to announce a nationwide investigation cleverly named "Operation Ghostbusters." 

McDonald described the operation as "a whole-of-government response to stop this ghost student scheme."

The Fraud Division is working with U.S. attorneys offices across the country, the FBI, the Department of Education Office of Inspector General, U.S. Customs and Border Protection, the State Department, DOJ's Criminal Division, and other partners to stop this fraud.

This investigation began with agents at the FBI Richmond Field office, and prosecutors right here at the Eastern District of Virginia.

It has now expanded nationwide. There are more than 40 open cases across 26 FBI field offices and more than 20 U.S. attorneys offices resolved to stop this scam.

Operation Ghostbusters is a nationwide investigation into a large‑scale student‑loan fraud scheme in which criminal actors created fraudulent Federal Student Aid (FAFSA) accounts using stolen U.S. citizen identities to enroll “ghost students” in educational institutions.

"This is the first international seizure of its kind in Kenya. 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." -@AAGMcDonald

McDonald also announced that the operation had netted five international fraudsters from Kenya. He asserted, "It is schemes like this one that President Trump, Vice President Vance and the White House Task Force to eliminate fraud are resolved to defeat."

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Throughout the year, Americans submit a FAFSA application with the Department of Education, praying they might receive the funds or loans necessary to attend college. For many, that FAFSA application is their only chance. The American people know this, so they generously fund federal student aid programs to help students and families who otherwise couldn't pay for college. But every year, alongside those eager American students submitting their loan applications, praying for a better future, are fraudsters, submitting fraudulent student loan applications by the thousands, preying on the American taxpayer and American victims.

Operation Ghostbusters is working to stop them.

Let me briefly describe how this scheme works. 

First, criminals steal the identities of real Americans. They specifically target Americans who haven't attended college. They use those stolen identities to create ghost students to apply to colleges across the country. Next, they apply for federal student aid using those same stolen identities. And if successful at duping the Department of Education, ED then sends the aid money to the college where the ghost student is enrolled. After tuition and fees are deducted, the leftover federal funds are deposited directly into bank accounts controlled by fraudsters. And in a flash, the money vanishes, often overseas in places like Kenya. 

As my RedState colleague Ben Smith reported, the U.S. Department of the Treasury was one of the initial government agencies that raised the alarm that this scheme was afoot.

Foreign and domestic fraud rings are stealing federal student aid by creating fake students, hijacking real identities, and using artificial intelligence to keep phony applicants enrolled long enough to collect taxpayer-funded refunds.

RedState's Ward Clark wrote on the warning from Treasury and Sec. Scott Bessent just under two weeks ago, also.

And it seems Kenyan nationals have become quite adept at siphoning off the American taxpayer. McDonald announced:

And today, we are announcing charges against five defendants and the seizure of more than $750 thousand dollars of cryptocurrency tied to this scheme and laundered through a network associated with Kenyan nationals. This is the first international seizure of its kind in Kenya.

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.@AAGMcDonald gives an update on Operation Ghostbusters, a nationwide investigation into federal student loan fraud:

"Today, we are announcing charges against five defendants and the seizure of more than $750,000 in cryptocurrency tied to this scheme, and laundered through a network associated with Kenyan nationals... Whether you’re in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you and bring you to justice. The American people deserve better than ghost students, fake applications, and stolen aid."

In Nebraska, a grand jury has indicated Francis Mogambi, a Kenyan national, on charges of theft of government money and aggravated identity theft. According to court documents, Mogambi allegedly worked with associates in Kenya to steal U.S. identities, enroll victims as students, redirect federal aid payments, keep a share for himself, and send the rest to co-conspirators in Kenya.

In New Jersey, Mabed Patricia Utate-Alberto, Patricia Arisleydi Perez, and George Arturo Alfau Mendez are charged with conspiracy to commit wire fraud. They allegedly acted as money mules in a scheme involving hundreds of ghost students and more than 1.3 million in proceeds. 

Prosecutors allege that money was sent overseas, including to individuals connected to a Kenya-based safari business used as a cover. We are also acting urgently with Secretary McMahon and the Department of Education to identify and shut off fraudulent accounts to stop this money from going to the fraudsters.

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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. Some even create the appearance of a fake student in an online classroom to trick schools into believing that a real person is present.

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. These are not isolated errors, this is organized fraud, at scale.

But lost dollars do not tell the complete story. The complete story includes the plight of an American citizen who graduated high school and went straight to work to provide for his family. He never applied to college, he never enrolled in classes, and he never asked for federal student aid. But one day, he finds his name attached to loan from a school hundreds or thousands of miles away. He didn't attend the school, he didn't receive the education, he didn't get any money. But his identity was stolen, his credit is now at risk, and his name is on the bill.

McDonald concluded:

The American people deserve better than ghost students, fake applications, and stolen aid. They deserve student aid programs that serve students, protect taxpayers, and punish criminals. This is not the end of Operation Ghostbusters, this is just the beginning.

McDonald stated the OIG investigators believe the fraud has been ongoing since at least 2021. As RedState reported in January, Minnesota and California are major epicenters. He added that in 2024, nearly one-third of California community college applications submitted were reportedly flagged as fraudulent.

This is an ongoing story, and RedState will provide updates as warranted.