The Justice Department on Thursday, Oct. 29, 2026, announced “Operation Ghostbusters,” an effort targeting an international student aid fraud network. (Kevin Carter/Getty Images)
Federal authorities have launched a nationwide investigation known as “Operation Ghostbusters” to dismantle an international scheme that allegedly exploited student aid programs. Investigators believe the operation, which may have been active since 2021, could have caused “potentially several hundred million dollars” in taxpayer losses.
Assistant Attorney General Colin McDonald said the first round of enforcement actions revealed how organized groups allegedly stole the identities of working Americans who had never applied to college. The suspects then used that information to create fictional “ghost students,” enroll them at schools across the country and direct federal aid to offshore accounts.
“These are not isolated errors,” McDonald said during a news conference Thursday. “This is organized fraud at scale.” He added that some participants use artificial intelligence to complete college applications and coursework.
Others allegedly go further by creating the illusion that a fake student is participating in an online class, deceiving schools into believing that an actual student is attending.
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The investigation includes more than 40 active cases being handled by 26 FBI field offices. Authorities have indicted five defendants and seized more than $750,000 in cryptocurrency allegedly laundered through networks connected to Kenya.
“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,” McDonald said during the question-and-answer portion of the briefing.
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Prosecutors allege that once tuition and fees were paid, the remaining grant and loan funds were routed through domestic “money mules” before being transferred overseas. Some of the money allegedly moved through businesses such as a Nairobi safari company. Meanwhile, identity-theft victims were left with damaged credit and bills for classes they never took.
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“The complete story includes the plight of an American citizen who graduated high school and went straight to work to provide for his family,” McDonald said. “He never applied to college, he never enrolled in classes, and he never asked for federal student aid. But one day, he finds his name attached to a loan from a school hundreds or thousands of miles away.”
“His credit is now at risk and his name is on the bill,” McDonald added.
McDonald said the investigation began in earnest in April, while the alleged fraud itself dates back to 2021, during the Biden administration.
“If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build their future, we are resolved to find you and prosecute you,” McDonald said. “Whether you’re in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you and bring you to justice.”
Under Secretary of Education Nicholas Kent blamed the Biden administration for removing key safeguards designed to detect fraud.
“When we walked in the door last January, we were extremely troubled to find that the Biden administration had turned off nearly every fraud detection measure, allowing critical funds to become the target of large-scale fraud,” Kent said. “The federal student aid programs result in about a $1.7 trillion federal student loan portfolio. That’s like turning off fraud detection efforts at Wells Fargo, which is just crazy.”