The United States has charged five people, among them two Kenyan nationals, over an alleged international network that used stolen American identities to enrol "ghost students" in colleges and divert federal student aid to accounts in the US and Kenya, with Kenyan investigators helping to seize about Sh97 million in cryptocurrency linked to the scheme.

The US Embassy in Nairobi on Friday thanked the Directorate of Criminal Investigations (DCI), the Assets Recovery Agency, the Office of the Director of Public Prosecutions, the Kenya Revenue Authority and the Financial Reporting Centre for their role, saying the joint investigation is continuing and that its efforts against the fraud are not over.

Operation Ghostbusters

The US Department of Justice announced the first results of the probe, dubbed Operation Ghostbusters, on Thursday. Prosecutors say the network created fictitious applicant accounts on the Free Application for Federal Student Aid (FAFSA) using personal details stolen from US citizens, enrolled the fake students in colleges and universities, and then collected loans and grant refunds even though no one ever attended class.

Assistant Attorney General Colin McDonald said the department was "charging five defendants and announcing the seizure of more than $750,000 in cryptocurrency" from an account belonging to a Kenyan national. He warned suspects outside the US that investigators would come after them: "Whether you are in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you."

The cases so far

According to the Justice Department details reported by The Star, Kenyans.co.ke and Capital FM:

  • Nebraska: A Kenyan national was indicted on October 19 on five counts of theft of government money and five counts of aggravated identity theft. Prosecutors allege that between November 2025 and May 2026 he worked with associates in Kenya, kept 30 per cent of the proceeds and sent the rest to co-conspirators in Kenya. He is in custody pending trial.
  • Virginia: Another Kenyan national was indicted on October 21 over more than 700 allegedly fraudulent aid refunds worth about $1.44 million, at least $1.3 million of which was allegedly moved to accounts in the US and Kenya.
  • New Jersey: Three people were arrested for allegedly conspiring with people in Kenya to obtain more than $1 million in federal student aid, with part of the money sent to associates linked to a purported safari company.

The department says it is also pursuing charges against two alleged co-conspirators based in Kenya. None of the accused has been convicted, and the defendants were not named in the reports carried by Kenyan outlets.

A much bigger problem

US agencies say they flagged 830,840 potentially fraudulent Federal Student Aid accounts for the Department of Education to disable. The FBI puts losses from similar ghost-student schemes at more than $32 million (about Sh4.1 billion), while the Justice Department believes the wider network, which may have been running since at least 2021, could exceed $200 million (about Sh26 billion).

FBI Assistant Director Heith Janke said investigators "will follow all evidence, track every dollar, and pursue each criminal who seeks to exploit our nation's systems."

Photos: The Star / US Department of Justice; G. Edward Johnson via Wikimedia Commons (CC BY 4.0). Thumbnail design: HAMASTA MEDIA.