The United States Department of Justice has uncovered an alleged nationwide student aid fraud scheme estimated to have cost American taxpayers more than $200m, with investigators identifying links to a network of Kenyan nationals.

The department disclosed this on Thursday while announcing the first results of Operation Ghostbusters, an investigation into the alleged misuse of federal student loans and grants through fake student enrolments.

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The operation has resulted in charges against five defendants and the seizure of more than $750,000 in cryptocurrency allegedly connected to the scheme.

The Assistant Attorney General of the Justice Department’s National Fraud Enforcement Division, Colin McDonald, said the investigation was targeting a network accused of exploiting federal education programmes meant to support students and low-income Americans.

“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,” McDonald said.

He warned that investigators would pursue suspects regardless of their location, including those operating from outside the United States.

According to the Justice Department, the alleged 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 stolen identities were subsequently used to enrol fictitious students, commonly described as “ghost students”, in colleges and universities to qualify for financial assistance.

The department said the individuals whose identities were stolen were not necessarily aware that they had been enrolled in educational institutions, while the fictitious students did not attend the classes for which the funds were obtained.

Investigators alleged that the suspects also used techniques to make the fake students appear to participate in classes and complete coursework, allowing the fraudulent payments to continue.

After the funds were disbursed, refunds were allegedly redirected to bank accounts controlled by members of the criminal network.

Some individuals based in the US reportedly acted as money mules, receiving and transferring the proceeds to associates overseas, including in Kenya.

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

The trio allegedly received the money through US bank accounts after fraudulent applications were submitted using stolen American identities.

They were also accused of transferring the proceeds to co-conspirators in Kenya after retaining their share.

The three defendants have been arrested, while the Justice Department said it would seek charges against two alleged co-conspirators based in Kenya.

In Virginia, a Kenyan national was indicted on October 21 over an alleged scheme involving more than $1.44m.

The suspect allegedly moved the funds through multiple bank accounts before transferring at least $1.3m in 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 American identities, enrol fictitious students in educational institutions and divert federal student aid payments.

According to the indictment, Mogambi allegedly retained 30 per cent of the proceeds and transferred 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 operation.

Investigation uncovers wider fraud network

The Justice Department said the FBI had identified more than $32m in losses from similar ghost-student schemes, with investigators suspecting that the actual amount could be significantly higher.

It also identified 830,840 potentially fraudulent Federal Student Aid identification numbers linked to nearly $130m in transactions during September and October 2026.

Investigators recommended that the US Department of Education disable the affected identification numbers.

The department said the alleged fraud had been ongoing since at least 2021, with estimates putting the total losses above $200m.

The investigation was opened by the FBI Richmond Field Office following a referral from the US Department of Education’s Office of Inspector General.

More than 40 related cases are now being handled across 26 FBI field offices and over 20 US Attorneys’ Offices.

The Justice Department said Operation Ghostbusters would continue, with investigators working alongside Kenyan authorities to recover funds and pursue suspects believed to be operating outside the United States.

It added that the investigation remained ongoing.