WASHINGTON — The Justice Department unveiled charges against five people accused of orchestrating a sophisticated campaign to rip off federal financial aid by enrolling “ghost students” who existed only on paper — seizing about $750,000 in ill-gotten funds.
The network operated in the US and Kenya, where a phony safari company banked the loot after applying to and then enrolling phony students in college, using stolen identification.
The Kenyan scheme is believed to have netted about $2 million.
Three of the five defendants — Mabed Utate-Alberto, Patricia Perez and George Mendez — were charged in New Jersey for acting as “money mules” opening bank accounts to send about $1.3 million to Kenya. Two Kenyan citizens were indicted in Nebraska and Virginia.
“This is organized fraud at scale,” assistant attorney general for fraud Colin McDonald said at a press conference, where he dubbed the effort “Operation Ghostbusters.”
“Investigators believe this fraud has been ongoing since at least 2021, potentially reaching several hundred million dollars lost. In California, nearly 1/3 of community college applications submitted in 2024 were reportedly flagged as fraudulent.”
McDonald said that the fraud is difficult to catch, especially with online classes, as the scammers use artificial intelligence to complete coursework and give the impression of attendance, sometimes even hiring actual people to appear on-screen using the stolen identifications.
Undersecretary of Education Nicholas Kent, describing himself as a former low-income student, said that the new case “sends a warning that we are serious to fraudsters, both at home and abroad.”
The Education Department has started to require applicants to show ID to fill out the Free Application for Federal Student Aid (FAFSA) form, Kent said, resulting in “nearly $600 million in savings in just six months.”
Kent estimated that Trump adminsitration anti-fraud efforts had stopped more than $2 billion in fraudulent student aid payments.
Heith Janke, assistant director for the FBI’s Criminal Division, said that authorities had found 830,000 potentially fraudulent student aid accounts, often targeting community colleges.
“We’ve identified more than $32 million in actual loss tied to these specific subjects, but we believe that actual total is substantially higher,” he said.
“We are working with colleges, universities, and local law enforcement to raise awareness of the ghost student scheme and encourage prompt reporting when victims discover suspected federal student loan fraud.”
Andrew Ferguson, the Federal Trade Commission chairman and vice chairman of the White House fraud task force, said that the Department of Education was “turning back on the anti-fraud measures that the previous administration turned off” and using AI to find suspicious patterns.
“It is appalling that the previous administration expected every American to go to work every day and have money taken out of their pockets to go to the federal government to go abroad to enrich the worst people in the world,” Ferguson said.
“Americans need to believe that when they pay their taxes into these programs, it’s going to help the people we agreed it’s going to help.”
The Trump administration’s anti-fraud efforts are led by Vice President JD Vance, who was not present for the announcement, and has focused heavily on benefits fraud.
Vance announced last month that 750,000 enrollees would be booted from Obamacare for suspected fraudulent enrollment, with another 450,000 put under review.
The anti-fraud task force previously withheld reimbursements for the low-income Medicaid program from states for certain programs deemed at high risk of fraud, imposed a moratorium on durable medical equipment providers for the old-age Medicare program and suspended 447 purported hospice providers in California.
In August, the administration closed 270 commercial driver’s licensing (CDL) schools for allegedly graduating illegal immigrant truck drivers who can’t speak English and offering subpar training facilities.
