Kenyans Linked to US Student Aid Fraud Probe Estimated at KSh25.8 Billion

US investigators have uncovered an alleged international network using stolen American identities to claim government-funded student aid, with Kenyan nationals among those facing charges and more than KSh97 million in cryptocurrency seized from an account linked to the investigation.

The US Department of Justice estimates that the wider fraud involving so-called “ghost students” could exceed US$200 million (about KSh25.8 billion).

The investigation, known as Operation Ghostbusters, has so far resulted in charges against five people in three US states: Virginia, Nebraska and New Jersey. Two of the defendants are Kenyan nationals.

However, the US$200 million estimate relates to the wider investigation, not the amount attributed to the five defendants. The combined intended losses in the three cases announced so far are estimated at about US$2.9 million (approximately KSh376 million).

The Justice Department announced the first enforcement actions on Thursday, October 29, saying investigators had also identified hundreds of thousands of potentially fraudulent student-aid records.

How the alleged ghost-student scheme worked

According to US prosecutors, the suspected fraudsters used personal information stolen from American citizens to create fake identities and submit applications for federal student financial assistance.

The applications were made through the Free Application for Federal Student Aid (FAFSA), the system used by eligible students to seek government funding for college and university education.

The alleged fraudsters then used the identities to enrol fictitious students in educational institutions.

Once the applications were approved, the institutions received the funds and deducted tuition fees and other charges. The remaining money was released as refunds into bank accounts allegedly controlled by the fraudsters or their associates.

The supposed students did not attend the classes for which the funding had been issued.

The Justice Department says some victims were Americans who had never enrolled in college. They only discovered that their identities had been used when they received information showing that they had supposedly attended institutions far from their homes.

Investigators believe the wider scheme has been running since at least 2021.

Two Kenyans among five people charged

The first cases announced by the Justice Department involve alleged fraud networks operating across Virginia, Nebraska and New Jersey.

In Nebraska, Kenyan citizen Francis Mogambi was indicted by a federal grand jury on October 19.

He faces five counts of theft of government money and five counts of aggravated identity theft.

Prosecutors allege that between November 2025 and May 2026, Mogambi worked with associates in Kenya to obtain stolen American identities and use them to secure federal student aid.

The indictment alleges that he kept 30 per cent of the proceeds and sent the remainder to his co-conspirators in Kenya.

The Justice Department also says court documents indicate that Mogambi received about US$2,000 a week and attempted to recruit another person into the operation. The Nebraska case involves an estimated US$20,000 in intended losses.

In Virginia, another Kenyan national was indicted on October 21 over an alleged scheme involving more than US$1.4 million in student aid.

The indictment, which remains under seal, alleges that the suspect worked with people in Kenya to obtain stolen American identities and submit fraudulent applications.

Investigators say the individual received approximately US$1.44 million through more than 700 student-aid refund deposits made into multiple bank accounts.

At least US$1.3 million was subsequently transferred through thousands of wire transfers and money-service transactions to accounts in the US and Kenya.

The suspect's identity has not been made public in the Justice Department's announcement.

Three arrested in New Jersey as investigators follow money to Kenya

A separate case in New Jersey involves three defendants accused of acting as money mules for a network allegedly working with associates in Kenya.

The Justice Department says the alleged operation ran from March 2021 to January 2026 and involved more than US$1 million in federal student aid obtained through fraudulent applications.

The three defendants allegedly received the funds through American bank accounts before transferring the money overseas after keeping a share.

Prosecutors say the Kenyan associates were linked to a purported safari company.

The three New Jersey defendants have been arrested. The Justice Department says it intends to pursue charges against two alleged co-conspirators based in Kenya as the investigation continues.

The case carries an estimated US$1.5 million in intended losses.

US seizes cryptocurrency worth about KSh97 million

The investigation has also reached Kenya through an international asset seizure.

The Justice Department says US investigators, with assistance from Kenyan law enforcement agencies, seized more than US$750,000 (about KSh97 million) from a cryptocurrency account belonging to a Kenyan national connected to the alleged scheme.

The department described the recovery as the first international seizure of its kind in the history of its National Fraud Enforcement Division.

It did not identify the account holder or state that the seized cryptocurrency was linked to any of the five defendants already charged.

In September, US officials travelled to Kenya to discuss cooperation on extradition, prosecution and the recovery of money allegedly stolen from American taxpayers.

Kenya's Directorate of Criminal Investigations (DCI), Asset Recovery Agency (ARA) and Office of the Director of Public Prosecutions (ODPP) are listed among the agencies assisting the operation.

Assistant Attorney General Colin M. McDonald said the investigation would not stop at US borders.

“Whether you are in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you,” he said.

More than 830,000 suspicious student-aid records identified

The scale of the investigation extends beyond the five people charged.

The Justice Department says investigators identified 830,840 potentially fraudulent Federal Student Aid identification records in September and October 2026. The records were associated with nearly US$130 million in funding.

Authorities recommended that the Department of Education disable the affected identification records to prevent further misuse.

That figure should not be confused with confirmed losses. It represents funding associated with records investigators considered potentially fraudulent.

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

The Justice Department says the wider investigation has produced more than 40 active cases across 26 FBI field offices and more than 20 US attorneys' offices.

The operation is being conducted with the FBI, the Department of Education and other US agencies, alongside Kenyan law enforcement partners.

For Kenya, the investigation raises questions about cross-border financial networks and the use of local bank accounts, businesses and cryptocurrency channels to move suspected proceeds of international fraud.

More charges and asset recovery efforts could follow as investigators trace the money and identify other people allegedly involved.

The cases are still before the courts. An indictment or criminal complaint contains allegations, not proof of guilt. All those charged are presumed innocent unless convicted.

About the Author

Maureen Onyango is a journalist passionate about storytelling, life coaching and spiritual lessons. She studied at the Kenya Institute of Management and enjoys telling stories that inform, inspire and empower communities.