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The Justice Department announced charges against five defendants Thursday in a nationwide investigation into alleged “ghost student” fraud, saying stolen American identities were used to obtain federal student aid and divert refunds through U.S. bank accounts to overseas participants.
Prosecutors also announced the seizure of more than $750,000 in cryptocurrency tied to the alleged scheme, with assistance from Kenyan law enforcement. The cases span New Jersey, Virginia and Nebraska under an investigation called Operation Ghostbusters.
The DOJ announcement says the fake students did not actually attend the classes for which aid was awarded. The allegations have not been proved, and all defendants are presumed innocent unless proved guilty in court.
Three New Jersey defendants arrested
In New Jersey, prosecutors say three defendants acted as U.S.-based money mules, receiving student-aid funds obtained through fraudulent applications using stolen identities. They allegedly kept a share and transferred money to co-conspirators in Kenya. All three were arrested on a criminal complaint, according to the DOJ.
The release lists that case as involving $1.5 million in intended loss. Intended loss is not the same as money actually lost. The department also described a Virginia indictment involving a U.S.-based money mule and a Nebraska indictment charging theft of government money and aggravated identity theft.
A risk for people who never applied for college aid
The department says some identity-theft victims had never attended college and learned that their identities had been used at institutions hundreds of miles away. That makes the alleged scheme an identity-theft issue as well as a loss of taxpayer-funded student aid.
The DOJ directed people who believe they are victims to the Department of Education inspector general’s hotline complaint form. It said people who received an FBI notification letter should follow its instructions and contact their local FBI field office with questions.
JBizNews Desk | Washington
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