The United States Justice Department has announced criminal charges in a major student financial aid fraud investigation linked to a network operating between the US and Kenya, with investigators seizing more than $750,000 (about Sh97 million) in cryptocurrency connected to the scheme.
The operation, dubbed Operation Ghostbusters, targets an alleged fraud scheme in which criminals used stolen identities of American citizens to create fictitious students, obtain federal education funding and divert the money into accounts controlled by people involved in the alleged conspiracy.
In an announcement published on October 29, the Justice Department said five defendants had been charged in cases arising from the nationwide investigation, which has exposed suspected fraud involving federal student aid programmes.
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The investigation has also drawn Kenyan law enforcement agencies into an international effort to trace funds, pursue suspects and recover money allegedly stolen from American taxpayers.
According to the US authorities, cooperation with Kenyan investigators helped facilitate the seizure of more than $750,000 held in a cryptocurrency account belonging to a Kenyan national linked to the scheme.
The department described the recovery as the first international seizure of its kind in the history of its National Fraud Enforcement Division.
The announcement places Kenya at the centre of an expanding investigation into suspected cross-border financial crime, although the involvement of Kenyan agencies in the operation does not, by itself, imply wrongdoing by those institutions.
How the alleged scheme worked
Investigators say the scheme exploited the US Federal Student Aid system by using stolen personal information belonging to American citizens to submit fraudulent applications for financial assistance.
The individuals behind the scheme allegedly enrolled fictitious students, obtained education funding and redirected refunds to bank accounts controlled by people involved in the operation.
The purported students, referred to by investigators as “ghost students”, did not actually attend the institutions to which they were supposedly enrolled.
Instead, the funding intended to support genuine students was allegedly diverted through a network of accounts and intermediaries, with some of the proceeds transferred overseas.
The investigation has identified suspected links between people in the United States and associates in Kenya, with American-based intermediaries allegedly helping receive and move funds before transferring money to overseas associates.
The Justice Department estimates that the broader fraud involving these schemes could exceed $200 million.
Investigators believe the activity has been taking place since at least 2021, with cases emerging across multiple states.
Kenyan nationals named in US cases
The Justice Department outlined several cases involving alleged links to Kenya.
In one case, a Kenyan national was indicted in the Eastern District of Virginia on allegations of conspiracy to commit wire fraud and student aid fraud.
According to the indictment, the individual allegedly worked with people in Kenya to use stolen American identities to submit fraudulent financial aid applications targeting more than $1.4 million.
The indictment alleges that more than 700 fraudulent student aid refund deposits, totalling approximately $1.44 million, were received through multiple bank accounts. At least $1.3 million was subsequently transferred through wire transfers and money service businesses to accounts in the United States and Kenya.
In a separate case in Nebraska, Kenyan citizen Francis Mogambi was indicted on charges of government money theft and aggravated identity theft.
Prosecutors allege that between November 2025 and May 2026, Mogambi worked with associates in Kenya to use stolen identities to obtain American student financial aid fraudulently.
According to the indictment, he allegedly retained 30 per cent of the proceeds and sent the remainder to his co-conspirators.
The allegations remain subject to determination by the courts.
In New Jersey, prosecutors also brought a criminal complaint against three defendants accused of participating in a scheme involving more than $1 million in student financial aid. The complaint alleges that money received through US bank accounts was transferred overseas to associates in Kenya linked to a purported safari business.
The Justice Department said further action against two alleged Kenyan-based co-conspirators in that case could follow as the investigation progresses.
US identifies nearly $130 million in potentially fraudulent accounts
The investigation has expanded beyond the individual cases, with authorities examining hundreds of thousands of potentially fraudulent student aid identities.
The Justice Department said investigators identified 830,840 potentially fraudulent Federal Student Aid identities in September and October 2026, associated with nearly $130 million.
Authorities recommended that the US Department of Education disable the identified accounts.
The figures underscore the scale of the suspected abuse and the challenge facing investigators as they attempt to distinguish legitimate students from fictitious applicants created to obtain government funding.
The Federal Bureau of Investigation and the Department of Education’s Office of Inspector General are among the agencies involved in the investigation.
The FBI has also identified more than $32 million in losses in similar ghost-student schemes, with investigators suspecting that additional losses may emerge.
Kenya-US cooperation intensifies
The investigation has prompted closer cooperation between American and Kenyan authorities, including efforts to pursue suspects, facilitate extradition where appropriate and recover assets allegedly obtained through fraud.
The Justice Department said representatives of its Fraud Division and partner agencies visited Kenya in September to promote cooperation on extradition, prosecution and the recovery of funds stolen from American taxpayers.
Kenya’s Directorate of Criminal Investigations, Asset Recovery Agency and Office of the Director of Public Prosecutions are listed among the law enforcement partners supporting Operation Ghostbusters.
The US department also acknowledged technical assistance provided through its International Computer Hacking and Intellectual Property programme, which supports foreign law enforcement, prosecutors and judicial partners in addressing cybercrime and intellectual property offences.
Assistance in this case includes expertise from an attorney adviser based in Dar es Salaam, Tanzania, and a specialist programme covering the dark web and cryptocurrency.
A US Department of Justice resident legal adviser in Nairobi has also provided significant assistance, according to the announcement.
The cooperation reflects the international dimension of financial crime investigations, particularly where digital transactions, cryptocurrency and bank transfers can move money across borders.
US expands crackdown on fraud
The operation comes as the Trump administration intensifies its efforts to combat fraud involving federal benefit programmes.
On April 7, the Justice Department announced the creation of its Fraud Division, tasked with investigating and prosecuting offences targeting the American public.
The division’s work supports the White House Task Force to Eliminate Fraud, chaired by Vice President JD Vance, which seeks to address fraud, waste and abuse in federal benefit programmes.
The Justice Department says the broader effort is intended to protect public funds and ensure that government assistance reaches its intended beneficiaries.
For Kenya, the unfolding investigation highlights the growing importance of international cooperation in tracing financial transactions, investigating suspected fraud networks and recovering assets held across jurisdictions.
The cases also demonstrate how stolen identities and digital payment systems can be exploited to move funds far from the programmes they were intended to support.
The US Justice Department has cautioned that indictments, criminal complaints and other charging documents contain allegations, not proof of guilt. All defendants are presumed innocent unless proven guilty beyond a reasonable doubt in court.
