The US has charged five individuals as part of the first broad federal crackdown on “ghost students”—fraudsters who steal the identities of hundreds of Americans to pose as fake college students and steal student loans. In a press release Thursday, the Department of Justice said it had uncovered a large-scale scheme relying partly on AI. The DOJ seized more than $750,000 in cryptocurrency from “a network associated with Kenyan nationals” after data analysis helped flag likely fraudsters.
Assistant Attorney General Colin M. McDonald of the DOJ’s National Fraud Enforcement Division credited new fraud-detection measures implemented by the Trump administration for the arrests. He said that “this is the first international seizure of its kind in Kenya,” while warning fraudsters that the crackdown has only just begun.
It starts with bad actors purchasing personally identifiable information (PII) of Americans—most frequently targeting high school graduates who never attended college and went straight into the workforce. Once they have that sensitive data, they fill out the Free Application for Federal Student Aid (FAFSA) while seeking to enroll in universities and community colleges. If accepted, student aid is distributed first to schools to cover tuition and fees, but any leftover money is deposited into bank accounts controlled by the fraudsters.
Dozens of Americans have opened bank accounts to act as money mules for fraudsters, the DOJ said.
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