US Launches 'Operation Ghostbusters' Against Huge Student Aid Fraud Using Fake Students

Federal law enforcement authorities in the United States have launched a nationwide operation against an international ring that created fake students to siphon off federal student aid money. The operation has been dubbed 'Operation Ghostbusters'.

Investigators estimate the ring has been operating since 2021 and that taxpayer losses could reach 'several hundred million dollars'. The Justice Department announced the operation on Thursday (29 October).

Announcing the first wave of enforcement, Assistant Attorney General Colin McDonald said organised syndicates have stolen the identities of working Americans who never applied to college. Using their information, fictional 'ghost students' were enrolled at institutions nationwide and federal financial aid was siphoned directly into offshore accounts.

McDonald said at Thursday's news conference: 'These are not isolated errors. This is organized fraud at scale. Some use artificial intelligence to fill out college applications and complete coursework. Some even create the appearance of a fake student in an online classroom to trick schools into believing a real person is present.'

The sprawling operation currently spans more than 40 open cases across 26 FBI field offices. Indictments have already been brought against five defendants, and more than $750,000 in laundered cryptocurrency tied to networks in Kenya has been seized internationally.

McDonald said during the question-and-answer portion of the news conference: 'We have already sent a team to Kenya to be on the ground for purposes of rooting out this fraud scheme and figuring out how it works on the ground in Kenya.'

Prosecutors allege that after tuition and fees were settled, leftover grant and loan disbursements were siphoned through domestic 'money mules' and funnelled abroad, including through fronts such as a Nairobi safari company. Unsuspecting victims were left facing ruined credit and bills for an education they never received.

McDonald gave the example of an American citizen who graduated from high school and went straight to work to provide for his family, never applied to college, never enrolled in classes and never asked for federal student aid. But one day he found a loan in his name from a school hundreds or thousands of miles away. McDonald said: 'His credit is now at risk and his name is on the bill.'