A nationwide fraud scheme involving stolen identities, fake student enrolments and diverted federal education funds has allegedly cost the United States more than $200m, with investigators linking some of the activities to a network of Kenyan nationals.

The United States Department of Justice disclosed this on Thursday in a statement on its website while announcing the first results of Operation Ghostbusters, a nationwide investigation into the alleged misuse of federal student aid.

The Assistant Attorney General of the Justice Department’s National Fraud Enforcement Division, Colin McDonald, said, “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.

“The Department is charging five defendants and announcing the seizure of more than $`750,000 in cryptocurrency tied to this scheme through a network associated with Kenyan nationals.

“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.”

According to the department, the scheme involved criminals stealing the personal information of American citizens and using it to submit fraudulent applications for federal student loans and grants through the Free Application for Federal Student Aid system.

The identities were then allegedly used to enrol fake students, known as “ghost students”, in colleges and universities to make them eligible for financial aid.

However, the people whose identities were used were not necessarily aware of the enrolments, while the fake students did not attend the classes for which the funds were awarded.

The department said fraudsters also used methods to make the ghost students appear to be participating in classes and completing required coursework to keep the payments flowing.

After the funds were disbursed, refunds were allegedly redirected to bank accounts controlled by the criminal network, with US-based individuals acting as money mules to receive and transfer the proceeds to associates overseas, including in Kenya.

The department said the investigation had uncovered several cases across the country.

In New Jersey, three defendants — Mabed Patricia Utate-Alberto, Patricia Arisleydi Perez and George Arturo Alfau Mendez — were accused of conspiring with people in Kenya between March 2021 and January 2026 to obtain more than `$1m in federal student aid.

The three allegedly received funds through US bank accounts after fraudulent applications were submitted using stolen American identities. They then transferred the money to co-conspirators in Kenya after taking their share. All three have been arrested, while the department said it would seek to charge two Kenya-based co-conspirators.

In Virginia, a Kenyan national was indicted on October 21 over an alleged scheme involving more than 1.44m, through multiple bank accounts before transferring at least $`1.3m through thousands of transactions to accounts in the US and Kenya.

Another Kenyan citizen, Francis Mogambi, was indicted in Nebraska over allegations that he worked with associates in Kenya between November 2025 and May 2026 to steal the identities of American citizens, enrol them in educational institutions and redirect federal student aid payments.

The indictment alleged that Mogambi kept 30 per cent of the proceeds and sent the remainder to his co-conspirators in Kenya. He was also accused of telling a prospective recruit that he earned $2,000 weekly from the scheme.

The Justice Department said the FBI had identified more than $`32m in losses from similar ghost-student schemes, with millions more suspected.

Investigators also identified 830,840 potentially fraudulent Federal Student Aid identification numbers linked to nearly $130m in September and October 2026 and recommended that the Department of Education disable them.

The statement said, “Investigators believe that this fraud has been ongoing since at least 2021. Estimates put the scale of the fraud well over $200 million.

“The investigation was opened by the FBI Richmond Field Office following a USDOE‑OIG referral. There are now more than 40 open cases across 26 FBI field offices and more than 20 U.S. Attorneys’ Offices.

‘Through its District Fraud Counsel network of Assistant United States Attorneys, the Division was uniquely positioned to scale this investigation, resulting in targets sent to U.S. Attorney’s Offices coast-to-coast.”

The department said the investigation was ongoing and that the operation would continue to work with Kenyan authorities to recover funds and pursue suspects based abroad. The charges and allegations against the defendants have not been proven in court.