Kenyans linked to Ksh.376 Million US student aid fraud scheme

The cases fall under an investigation dubbed 'Operation Ghostbusters', with prosecutors estimating the combined intended financial losses at approximately $2.9 million (Ksh.376 million).

Two of the five defendants are Kenyans, while three others were arrested in New Jersey over allegations that they facilitated the transfer of more than $1 million (Ksh.129 million) in fraudulent student aid funds to co-conspirators in Kenya.

"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," Assistant Attorney General Colin McDonald said.

The five defendants face charges in three separate cases in New Jersey, Virginia and Nebraska. The two Kenyans were charged separately in Virginia and Nebraska, while three other suspects were arrested in New Jersey.

Two additional suspects based in Kenya, who allegedly worked with the New Jersey defendants, are also expected to face charges as investigations continue.

In one case, a Kenyan national allegedly received more than 700 fraudulent student aid refund deposits totalling approximately $1.44 million (about Ksh.186 million) through multiple bank accounts.

The suspect is accused of transferring at least $1.3 million (about Ksh.168 million) to accounts in the United States and Kenya through thousands of wire transfers and money service transactions.

The Justice Department also announced the seizure of more than $750,000 (Ksh.97 million) in cryptocurrency from an account belonging to a Kenyan national connected to the scheme.

According to the White House, the fraudsters stole personal information belonging to Americans, particularly those who had never attended college, and used the identities to create fictitious students, commonly referred to as ghost students.

The suspects allegedly used the stolen identities to enrol the fictitious students in colleges across the United States before submitting applications for federal student financial assistance through the Free Application for Federal Student Aid (FAFSA).

Once the applications were approved, the US Department of Education disbursed loans and grants to the respective institutions.

After deducting tuition fees and other charges, the remaining funds were refunded to bank accounts controlled by the fraudsters and their associates.

"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 to places like Kenya," the White House said.

In a statement on X, the White House specifically accused Kenyan nationals of using stolen American identities to obtain federal student aid for their personal benefit and that of co-conspirators operating overseas.

In a separate case in New Jersey, three defendants were arrested over allegations that they received more than $1 million in fraudulent student aid funds before transferring the money, after taking their share, to associates in Kenya linked to a purported safari company.

The scheme allegedly ran from March 2021 to January 2026, with prosecutors estimating the intended financial loss at $1.5 million.

The Justice Department said two co-conspirators based in Kenya are expected to face charges as investigations continue.

Meanwhile, in Nebraska, Kenyan citizen Francis Mogambi was indicted on 10 counts relating to the alleged theft of government money and aggravated identity theft.

Prosecutors allege that between November 2025 and May 2026, Mogambi used stolen American identities to fraudulently obtain student financial aid, keeping 30 per cent of the proceeds and sending the remainder to associates in Kenya.

The wider investigation has also identified 830,840 potentially fraudulent federal student aid identification accounts associated with nearly $130 million in funding. The authorities have recommended that the Department of Education disable the accounts.

The FBI has separately identified more than $32 million in losses from similar ghost student schemes, with additional losses suspected.

Operation Ghostbusters is being conducted by the Justice Department's National Fraud Enforcement Division in collaboration with the FBI, the Department of Education and other US law enforcement agencies, alongside Kenyan authorities.

The Justice Department said the investigation is ongoing and that it is working with Kenyan law enforcement agencies to recover funds and pursue suspects operating outside the United States.